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Not just treading water

Not just treading water

Stretching the length of Scotland’s shores, the ports and harbours that punctuate the coastline provide something of a link between the old and new.

Predating air travel and road freight, the maritime industries are still an essential lifeline for the country at the top of an island nation that, despite any more modern methods, still relies on sea transport for the majority of the goods which arrive in or leave the country.

With the demand for larger ships requiring deeper water and greater infrastructure, some ports have been forced to change tack, switching from heavy industry to ‘softer’ pursuits, like yachting or re-positioning themselves as a base for pleasure craft, while other harbours have simply fallen into disrepair or even been filled in.

However, while parts of the UK economy continue to struggle, business is still booming for port owners. Th is is particularly true in Scotland where there are substantially more ports than in the rest of the UK.

In February, an Oxford Economics report, prepared for Maritime UK, concluded that the maritime services sector in Scotland was contributing £3.8bn to Scottish GDP, generating nearly £1.2bn in tax revenue to the Treasury. In 2011, that sector employed an estimated 41,600 people across Scotland – with two-thirds employed in the ports industry and the majority of the remaining third in shipping.

In 2006, it was estimated that Scotland was handling the equivalent of 21 tonnes per person a year.

In Scotland there are three types of ports: trusts – a statutory body controlled by an independent board, which invests the profit back into the business; privatised ports – which are privately owned and often part of larger groups; and municipal ports, which are run by local authorities and accountable to elected councillors – particularly prominent examples of these are Orkney and Shetland ports, which are heavily used by the oil and gas industry.

The highest percentage of port activity is still fishing, estimated at about 50 per cent of all activities, with the majority of this based around the North East of Scotland, where Peterhead is celebrated as Europe’s number one fishing harbour, a fact enhanced by a £19m redevelopment of an unused embankment in 2009, helped by a £52.5m grant from the Scottish Government and European Fisheries Fund.

While these funds are available for some aspects of port developments, on the whole the industry, even those run by local authorities, are treated as being in the private sector.

The Scottish Ports Committee, part of the British Ports Association, is a group representing most of the ports in Scotland, although not Forth Ports. In 2006, BPA senior policy adviser, Richard Ballantyne drew up a report on the ports industry in Scotland, which highlighted that they were “fundamental to the Scottish and UK economies”.

He said while there had been changes since then caused by the recession, Glensanda, the number one Scottish exporter of aggregate, for example, now exports almost entirely to locations like South America and Asia, with shipments to England being hit by problems in the housebuilding and construction industry.

Colin Parker, chief executive of Aberdeen Harbour, a trust port, is confident about the port’s performance, despite financially straitened times. Last year, the port did just over 28 million tonnes of shipping, a record level – up from 8 per cent on the previous record level the year before. It also carried 5.1 million tonnes of cargo – another record and also 8 per cent up on the year before.

He said: “So far this year we’re around 9 to 10 per cent up on both figures for the same period last year and none of our customers are talking about being quieter in the next few years – far from it.” Already this year BP has announced further investment in the Claire oil field west of Shetland and has renewed its lease in the harbour for the next 10 years. In addition, there are plans to expand the existing harbour and also at Nigg Bay, just south of the harbour – which it is hoped could be included in the Scottish Government’s new National Planning Framework, due out later this month.

However, as ports are largely independent and privately funded, although they are required to comply with planning legislation and marine licensing, they do not rely on state subsidies; their role is perhaps more invisible than other methods of transport, such as road, rail and air, may be.

Parker adds: “I think that is a worldwide problem with harbours. People understand airports because they use them but they don’t necessarily have the same idea of how important a harbour is for generation of economic activity.

“A survey we did four or five years ago reckoned that activity related to the harbour injected over £500m a year into the local economy and sustained 11,000 full-time equivalent jobs. Because we are in the city centre, people do have an understanding of the amount of activity that goes on in the harbour, but it is an issue for most harbours around the world. People don’t think the same way about harbours because they’re not using it on a regular basis to go on holiday or to go away on business.”

Yet sea-freight and ferries have another important role to play in modern transport. As more and more businesses are fighting to reduce their carbon emissions, transporting cargo by sea is less carbon-intensive and also reduces road congestion.

Charles Hammond, chief executive of Forth Ports, whose group of harbours includes Leith, Dundee, Grangemouth and the newly-reopened Kirkcaldy, said what passes through his ports emits about 35,000 to 40,000 tonnes of CO2 a year, but takes out 12 times that from the economy in the road movements it has saved.

“From an environmental perspective, you are emitting about a third of the carbon of road movements, so the extent that you can ship your goods as close to the final destination as you can, or indeed export from as close to the point of production as you can, then you are lowering carbon emissions in the supply chain.

“I think there’s this perception that ships burn a lot of fuel.” Forth Ports, which also operates Tilbury in London was involved in the logistics for the Olympics last year and has moved furniture used during the London games to Grangemouth to be stored until it is reused for Glasgow’s Commonwealth Games next year.

Hammond, who is also chair of the UK major ports group, said its members invested about £300m in port facilities, but he would like to see a grant regime to encourage more coastal shipping.

“I don’t think enough prominence has been given to coastal shipping. You could reduce congestion on the roads to a large extent by having a much more varied and extensive coastal shipping network and the great thing about the sea is you don’t have to build rail tracks. The sea is there for you and can be used as long as there is infrastructure at both ends.

“The difficulty is that you haul one container on the road, but to make a shipping service viable, you need to have two to three hundred containers, There’s an initial phase in coastal shipping where it doesn’t make enough money to cover its costs. So there’s probably a case for a grant that gets you to a point where the volume generated allows you to start to make some money out of it.”

However, progress comes at a price.

A high-profile casualty in recent years is Stranraer – once home to a thriving ferry port until Stena moved its business to a new purpose-built port in nearby Loch Ryan, which allows the company to give customers a more direct service to Belfast and fit in more journeys per day.

Labour MP for the area, Russell Brown, has been among those calling for swifter action to put the port to good use and encourage economic development in the town.

He said: “Quite honestly, the fact that we saw Stena relocate from Stranraer out to the new Loch Ryan terminal has really had a detrimental impact on the locality. Whereas before people were coming into town in advance of getting on the ferry, that’s no longer happening, which means any economic spin-off that was there before is not happening.

“At the end of the day, Stena are probably the major private sector employer in the area and as a businesses they look to see in terms of how they’re operating – can they be efficient? Can they cut costs?

“The good thing is we’ve managed to retain the jobs in the area, although a reconfiguration of the service has led to job numbers falling slightly but it’s the knock-on consequences of that commercial decision.

“It’s really pointless people just throwing their arms up and saying, ‘this is terrible’; we need to look and see what we can do now and retrieve some of what we had.”

Dumfries and Galloway Council still has to wait for the harbour to be signed over from Stena, but has signed a memorandum of understanding and there are plans to develop the area for various uses, including leisure.

Brown said: “We need people to come and spend time, and more importantly, money, in that local economy. We’ve got to look more outwardly rather than just [having an] internal examination as to what we want locally.

“I know it’s not everyone’s idea of an answer to the problem, but where we’ve got water and a quayside area, money has to be invested to attract others.” Brown has been critical of the pace of progress and of the regeneration group, now chaired by Nicola Sturgeon, in her role as Cabinet Secretary for Infrastructure and Investment.

He added: “This isn’t a town that is totally lost, but if we don’t do anything, then we can only begin to imagine how desperate it might get. In the Wigtownshire area, jobs, especially for our young people, are so few and far between.

“We need something; some of it will have to be financial support to pump-prime projects that are going to happen here.”

A Dumfries and Galloway Council spokesman said: “The council is working with partners including Stena Line, to develop the East Pier. A design brief has now been put together and will guide the mixed-use development of the site; the brief looks at leisure, commercial and residential opportunities. The council is working with partners to develop the Loch Ryan Management Plan. The plan will support marine and nature-based projects on and around the loch such as bird hides, fishing stand areas and sailing.

“The West Pier refurbishment will start in April 2013 and is expected to be completed in early July. The refurbishment works will include structural repairs and strengthening of the existing timber pier. The pier will once again become an important viewing point at the waterfront for locals and visitors. A new slipway will also be developed adjacent to the West Pier, procurement and commission work is under way at present.”

Forth Ports is an example of how the industry is successfully adapting to change.

Two years ago, the company started to develop a new masterplan for Leith, the largest enclosed deep-water port. Previous plans for the port and waterfront had been concentrated on residential and leisure purposes, but with the crash in the housing market, it has looked to invest elsewhere, with the focus now on developing the land surrounding the port to promote the growth of the industries wanting to come through it – particularly the burgeoning renewables sector.

Charles Hammond said: “For us, it made sense following the recession that having seen asset value inflation in the property market get to unsustainable levels, we changed the focus of the business. It made sense to look at whether we could start to develop greater demand through the port to use those land assets rather than just as development assets, the whole focus of the businesses has now changed and using these assets and [we can] generate demand for port use and port earnings.

“Hopefully, that will contribute to what we’re calling the modern industrialisation of [some ports], particularly in Leith but also in Dundee, “Clearly, if we can attract manufacturers into the ports in Scotland that will create quite a large number of skilled jobs, it will help the economy and it should also help business through the port.

“Leith has a significant amount of land that could be used not just for frontline manufacturing, but support services distribution, logistics, raw materials that might be required for renewables as well.” Fort Ports estimates that its own operations along the Forth and Tay represent more than 50 per cent of Scotland’s GDP.

In Aberdeen too, alongside the expansion plans, the harbour board are preparing for potential challenges in the future.

Parker said: “The big challenge that we face with our expansion plan is making the business case stack up, because it’s a major investment we could potentially become involved in.

“We’re a trust port and very profitable, so any profits go back into the business, which is a great business model for a piece of infrastructure as it makes sure the money isn’t being hived off elsewhere and [then we could] have a very modern fit-for-purpose harbour.

“But the challenge we face is capacity because of the levels of activity. What I don’t want to see is activity that can’t be catered for in the North East of Scotland ends up being serviced from across the North Sea, in Norway, for example.” He added that the feasibility study for Nigg Bay is looking at not just catering for larger vessels, but an increased number of vessels.

“I’ve been at the harbour for 25 years and the vessels have gradually just got bigger and bigger.  We’re just near completing a development on the south side of the river at Torry Quay in recognition of the need to have a wider river.

“The old River Dee dock that used to be able to take nine vessels, more latterly, could only take four and really, the vessels were outgrowing that, so we filled that dock in and created important back-up land, but also strong deep water quays to handle the modern size of vessels.”

But alongside the continuing push to increase freight levels and heavy industry both old and new, a major growing source of income is the cruise industry.

Even just a decade ago, the large ocean liner cruise ships, which can now regularly be seen slowly making their way under the Forth Bridge towards Leith, would be a rare sight but it is now becoming increasingly common.

Hammond says there is still a lot of room for expansion for plans – worth, potentially, millions to the local economy.

“It’s always a difficult thing to measure but the additional cruise liners could add easily £50m to £100m per annum GVA to the Edinburgh and surrounding economies.

“When you consider a place like Tallinn, which is a world heritage site like Edinburgh but much smaller and I would argue with not as rich a heritage, it handles 300 cruise liners a year and in Leith, we’re only handling 40 to 50.”

Ballantyne, senior policy adviser at the BPA, said: “The cruise market wasn’t really a developed industry around the UK 20 to 30 years ago. It was mainly a Caribbean or Mediterranean activity, but now people are realising you can [go] in the summer, going up from Wales, Scotland, Northern England.

“Occasionally, you get winter cruises – I’m not sure if they’ve taken off in Scotland yet, but you get them around Scandinavia, so maybe that’s the next thing.”

Read the most recent article written by Neil Evans - Finding warmth: fuel poverty in Scotland

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