Conclusion

The main function of Liverpool Docks in 2008 in the bulk markets was as a location for the import (mainly in large ships), storage and (where appropriate) processing of bulk cargoes prior to inland distribution; about 60% of Liverpool Docks’ non-unitised cargoes handled across the quay in 2008 were imports. The major import cargoes were cereals, AFS and coal. The major high value imported non-unitised cargoes were paper products and steel, with the port also acting as a storage point for non-maritime cargoes that were received at the port by rail. For maritime import cargoes, rail had a 30% market share for inland distribution – due to the distribution of steam coal to inland power stations by rail; small volumes of steel scrap were imported from GB coastal locations by sea, stored and then re-exported in larger vessels with no impact on the inland road and rail networks.

Liverpool Docks’ major bulk export trade was scrap metal, transported in deep sea vessels. The scrap metal was received at the port by rail and sea but mainly by road. For export cargoes by sea, rail had an 8% market share for inland distribution, due to the distribution of some steel scrap to the port by rail.

Liverpool Docks handled all of the Port of Liverpool’s container traffic in 2008 and a significant proportion of its RoRo traffic. The Docks handled 414,000 containers in 2008 and the modal split for container distribution was 2% by rail, 14% transhipment and 84% by road. Liverpool Docks also handled an estimated 219,000 RoRo freight units in 2008, 72% of which were unaccompanied trailers.

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A summary of the traffics handled across the quays at Liverpool Docks in 2008 is provided in Table 2.5.

Table 2.5: Summary of maritime traffic via Liverpool Docks, 2008

Inwards Outwards

Traffic Inland by road Traffic Inland by road

Containers 203,000 units 84% 211,000 units 83%

Roll-on Roll-off freight units

115,000 units 100% 113,000 units 100%

Passenger cars 5,000 cars 100% 6,000 cars 100%

Bulk tonnes 6.1 million tonnes 65% 2.8 million tonnes 87% Source: Estimates by MDS Transmodal

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3 PORTS POLICY

3.1 Introduction

This chapter provides a summary of key ports policy documents at a European, UK and regional level and analyses how these policies might affect the future development of traffic through Liverpool Docks. A summary of policy relating to sustainable distribution is included in Chapter 5.

3.2 European ports policy

Public funding of ports and its state aid implications has traditionally been the major issue for European ports policy and the European Commission has been tolerant of public sector funding of ports infrastructure, arguing that existing state aid rules are sufficient i.e. there is no need for specific rules for the ports sector. Many Member States on the continental mainland regard port infrastructure as a “public good,” while port infrastructure in Great Britain has mainly been funded by the ports themselves.

However, in 2007 the Commission published a Communication on a European Ports Policy, which recognised that there may not be a “level playing field” between ports because of differences between the Member States in how they choose to fund their ports and the extent to which the ports compete with each other across national boundaries. The Communication stated that the Commission would adopt guidelines on state aid in ports in 2008, but so far these guidelines have not been published. Given the Port of Liverpool’s location on the west coast of GB, it is less likely to be affected by any changes in the state aid rules for ports than the deep sea container ports in the Greater South East, which compete for transhipment traffic with major continental deep sea container ports such as Rotterdam and Antwerp.

3.3 Background to UK ports policy

The Future of Transport White Paper

The last statement of official transport policy by the UK Government was in July 2004 in The Future of

Transport White Paper, which set out that the free movement of goods and people between the UK and

the rest of the world as being a key goal of Government policy:

“We want to contribute to regional and national prosperity by facilitating the free movement of people and goods in and out of the country by air or sea. This will mean maximising the benefits of growth in aviation and shipping while responding to the challenges that this presents. Our starting point is to make best use of our existing airports and ports capacity. Where new capacity is needed we will aim to minimise the effects on the communities around our major airports and ports and on the environment” (paragraph 7.8).

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The Eddington Report

Sir Rod Eddington was jointly commissioned by the Chancellor of the Exchequer and the Secretary of State for Transport in 2005 to examine the long-term links between transport and the UK’s economic productivity, growth and stability, within the context of the Government’s broader commitment to sustainable development. The results of the study were published in 2006.

Given the importance of international gateways for the economic performance of the country and their increasing congestion and unreliability, Sir Rod Eddington recommended maintaining or improving the performance of the UK’s key international gateways, specifically deep sea and feeder container ports and RoRo ports that support a high level of business.

Paragraph 1.127 of the Eddington Report states, “Adding deep sea container port capacity in line with projected demands could reduce international delivery costs by up to £140 million per annum up to 2030, with additional feeder costs also likely to deliver significant benefits. Expanding roll-on roll-off capacity, particularly in the South East, would also offer economic benefits.” Eddington was particularly positive about the potential economic benefits of removing bottlenecks on surface access routes to ports.

Delivering a Sustainable Transport System (DaSTS)

In November 2008 Government published the report Delivering a Sustainable Transport System (DaSTS). This restates Government’s five broad goals for transport policy:

• Maximising the competitiveness and productivity of the economy: Policy should focus on improving predictable end-to-end journey times for both passengers and freight and Eddington suggested this could be achieved by making the best use of existing networks, ensuring that transport pricing is set at the right level, by targeted new infrastructure investment for all types of infrastructure.

• Addressing climate change by establishing a price for carbon, developing and using carbon technologies and removing barriers that prevent people from making informed decisions about their use of carbon.

• Protecting people’s safety, security and health • Improving quality of life

• Promoting greater equality of opportunity.

The DfT has avoided prioritising these goals, but greater emphasis is placed on maximising the competitiveness and productivity of the economy and addressing climate change.

The DfT identified a number of transport infrastructure components in DaSTS that are critical to the functioning of the system as a whole and to the economic success of the nation. These are:

• The ten ports (including Liverpool) and seven airports (which together make up the key international gateways) through which most people and goods enter and leave

England;

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• The 14 national transport corridors that connect them and other areas with strong economic growth and inward investment with each other and with the principal freight distribution centres.

Where Government’s proposed approach involves development of national transport infrastructure, it intends that the Infrastructure Planning Commission will take key planning decisions, supported by the production of National Planning Statements (NPS) for the relevant sectors. The Ports NPS was published in November 2009 and is considered in section 3.4 below.

3.4 UK ports policy

Decision letter for Seaforth River Terminal

The DfT’s favourable planning decision on the application to develop a new post-panamax container terminal outside the lock gates at Seaforth was published in March 2007, prior to a significant up-date of UK ports policy.

In the DfT’s decision letter on the Seaforth river terminal harbour revision order (March 2007) the Secretary of State for Transport agreed with the Inspector that there is a “demonstrable need for the scheme…” (para.21). Furthermore, the Secretary of State was, “satisfied with the Applicant’s assessment that no other alternative is more suitable for meeting the identified need or is less detrimental to the environment” and agreed that, “the proposals…would enable the port to expand to meet changes in shipping trade and that this would contribute to additional job opportunities, and confer benefits to the local and regional economies” (paragraphs 22-23). The Secretary of State accepted that “the scheme is compatible with national, regional and local planning and transport policies” (paragraph 24).

The Secretary of State therefore accepted the recommendations of the Inspector that all the relevant permissions should be provided for the post-panamax container berths at Liverpool.

Ports Policy Review Interim Report

The Ports Policy Review Interim Report, published in July 2007, set out DfT ports policy apart from policy on inland connections and therefore focuses on general conclusions about the future direction of ports policy for England and Wales.

Forecasts produced for the DfT in 2006-07 and published in the Ports Policy Review Interim Report suggested that long-term growth in LoLo freight traffic (in tonnes) to and from GB is likely to be 3.5% per annum up to 2030. Furthermore the DfT stated in the Interim Report that, “in the absence of new development or large efficiency improvements over the coming decade, constraints would be in:

• Deep sea container terminals in the Greater South East, closest to the major shipping routes; • Feeder capacity (both berths and short sea shipping services) around the country for

movements via hub ports and elsewhere; and

• Roll-on roll-off terminal capacity in the South East, serving short-sea routes to the Continent” (paragraph 8).

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The DfT did not therefore specifically state in this document that it believed there would be a shortfall in deep sea container port capacity outside the Greater South East, although it has granted all the relevant permissions to allow Liverpool to develop its riverside post-panamax berths. Similarly, the DfT focused on the likely need for additional RoRo capacity only in the South East, rather than elsewhere in the country; this may reflect the fact that it had already granted the relevant permissions for the Langton riverside RoRo berth at Liverpool Docks.

The ports policy set out in the Interim Report is not determinative i.e. there is no intention to dictate to the ports industry where and how it should invest in new port infrastructure; it will be left to the private sector to make investment decisions, within the planning regime. However, the DfT wants to ensure that the ports industry develops to take full account of both the adverse impacts and the benefits of further development at local and regional levels. The report states,

“…a market oriented approach remains appropriate…there would in general be no additional benefit from a locally or regionally determinative ports policy. We also conclude that only in exceptional circumstances will the Government regard local regeneration as a justification for direct subsidy to a port.” (para.13)

Therefore, within an overall policy of sustainable development, the DfT regards market forces as being the major factor in deciding where additional port capacity is likely to be required.

Draft Ports NPS

The draft Ports NPS (published by the DfT in November 2009) sets out the Government’s conclusions on the need for new port infrastructure, considering the current place of ports in the national economy, the available evidence on future demand, and the options for meeting future needs. The document, once finalised after the consultation period, will be a key planning document for the future development of infrastructure at major ports, including infrastructure for port access, as the Infrastructure Planning Commission (IPC) must, as a general rule, decide an application for ports infrastructure in accordance with this NPS.

Overall ports policy, as set out in the Ports NPS, follows the policies outlined in the Interim Ports

Policy document. However, in paragraph 1.10.3, the Ports NPS emphasizes that,

“…the Government wishes to see port development wherever possible:

• supporting sustainable transport by offering more efficient transport links with lower environmental disbenefits;

• providing a basis for trans-modal shifts from road transport to shipping and rail, which are generally more sustainable;

• supporting sustainable development by providing additional capacity for the development of renewable energy; and

• supporting economic and social cohesion”.

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“These underlying policies are intended to support the fundamental aim of improving economic, social and environmental welfare through sustainable development. They recognise the essential contribution to national well-being that international and domestic trade makes. Economic growth is supported by trade but must be aligned with environmental protection and improvement wherever possible” (paragraph 1.10.4).

As in the Interim Ports Policy document, the DfT defines the need for ports infrastructure at a strategic level, based on port traffic demand forecasts produced in 2005-07 i.e. prior to the economic recession. Paragraph 1.11.2 states that “All previous evidence suggests that, over time and notwithstanding temporary economic downturns, increased trade in goods and, to a lesser extent in commodities, can be expected as a direct consequence of the Government’s policies to support sustainable economic growth and to achieve rising prosperity. With 95% of all goods in and out of the UK moving by sea and very limited alternatives, the majority of this increase will need to move through ports around the coast of the United Kingdom”.

Paragraph 1.11.3 states that, “Forecasts of demand for port capacity in the period up to 2030 by MDS Transmodal (MDST) were published on behalf of the Department for Transport in 2006 and updated in 2007. The central GB-wide forecasts suggested increases by 2030 over a 2005 base of:

• 182% in containers, from 7m to 20m teu (excluding transhipment), • 101% in ro-ro traffic, from 85m to 170m tonnes

• 4% in non-unitised traffic, from 411m to 429m tonnes.

“Since then, the recession has led to a severe downturn in demand, especially for unitized cargo. The full extent of this recession effect on trade through ports cannot yet be fully quantified. However, the Government’s view is that the long-term effect will be to delay by a number of years but not ultimately reduce the eventual levels of demand for port capacity predicted in these forecasts.” (paragraph 1.11.4).

The Ports NPS reiterates the policy set in the Interim Ports Policy that the DfT will not adopt a deterministic approach to port development, which would dictate where port development should occur. The DfT continues to regard the market as being the best mechanism for determining where development should take place, with developers bringing forward applications for port developments where it considers them to be commercially viable.

In conclusion, the Draft Ports NPS continues to regard the market as being the best way to determine where and what type of port infrastructure is required in the future. Demand forecasts up to 2030 have been accepted by the DfT as providing a strategic view of potential demand. The DfT believes that the economic recession will not halt traffic growth, but may delay growth by a few years. The Draft Ports NPS broadly supports the development of new port infrastructure at Liverpool Docks, within the context of the principles of sustainable development.

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Port Master Plan Guidance

The DfT published a consultation document on Port Master Plans in Summer 2008, which suggests that, although the development of master plans is likely to be voluntary, any “major” port that wants to expand its facilities in a way that that has external impacts beyond the port estate will find it much easier to receive the relevant permissions if a master plan has been developed.

Government’s consultation document on the introduction of port master plans recommends therefore that ports should undertake the development of port master plans, particularly those handling more than 1m tonnes per annum and expecting to bring forwards one or more substantial development proposal in the next 20-30 years.

According to the draft guidance, port master plans should:

• Clarify the port’s own strategic planning for the medium to long term;

• Assist regional and local planning bodies, and transport network providers, in preparing and revising their own development strategies;

• Inform port users, employees and local communities as to how they can expect to see the port develop over the coming years.

The Port of Liverpool would be regarded as a “major” port in the context of this draft guidance as it handles more than one million tonnes of cargo; Peel Ports has undertaken to develop a Mersey Ports Master Plan, encompassing Liverpool Docks and all the other port facilities on the Mersey and on the Manchester Ship Canal.

In preparing long-term master plans for ports, and specifically to demonstrate the need for expansion or investment, Peel will need to produce port-specific forecasts for the principal traffics, drawing on national port forecasts set out in the Ports NPS. The master plan should reconcile with, or justify deviation from, the national forecasts for the principal traffics by explaining the extent to which it is driven by:

• Any disagreement with the national forecasts;

• The port’s own commercial view of its prospects and opportunities; • Sub-traffic (sectoral composition of trade) issues.

3.5 Regional Policy

Regional economic context

The North West’s primary economic challenge is to narrow the GVA gap with the UK average – 8% or £2,900 per employee in 2007, the latest year for which data is available. Within the North West, Merseyside’s GVA per employee of £30,000 is the second lowest of the five sub-regions, albeit it grew significantly in the early part of this decade. Whilst North West productivity has grown, the rate of growth has not kept pace latterly with the better performing regions, so the gap with the UK average has widened.

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Looking forward, the consensus amongst economic forecasters is that levels of investment, innovation and enterprise alongside improvements in the labour force will combine to grow productivity (once