ISSUE 2 2010


RO-RO


17


Stormy seas for ferry freight


Ferry lines lodge protest over Dover Terminal 2 cash


Cross-Channel ferry operators P&O and Norfolkline have lodged a formal complaint with the Department for Transport against Dover Harbour Board’s alleged misuse of investment fund s for the port’s new Terminal 2. It is the latest stage of an ongoing dispute that has strained relations to breaking point after the three largest customers wrote to the port’s chief executive, protesting at the alleged misuse of £60 million they provided to fund Terminal 2 and a proposed 35% increase in their tariffs over the next three years. The lines filed a complaint to


the secretary of state because they was concerned about future pricing, which P&O spokesman Chris Laming described as “the privatisation of a monopoly” adding that it could threaten the whole of the ferry industry in Dover. Norfolkline followed soon afterwards and it is understood that Seafrance may make a similar complaint to the Government and possibly Brussels.


SeaFrance, P&O Ferries and Norfolkline described the discussions that have continued with the harbour board over the


past few weeks as “a complete waste of time.” The operators say that while


the extra funds were collected from them over the past three years to fund the planned Terminal 2, the small print of the privatisation plans suggest that this is no longer an immediate priority and there would in fact be no obligation on Dover’s new owner to actually build it. Terminal 2 now looks likely to be delayed by between six and ten years and is unlikely to be open before 2017 at the earliest – and more probably 2020. Instead, say the operators, the money is being used to fund the port’s pension fund deficit and so smooth the privatisation process, adding that the port also plans to increase port dues by over a third to build up a further cash pile “just in case privatisation doesn’t proceed.” They were led to believe


the cash was required because Dover’s non-profit making trust status made it impossible for the port to borrow elsewhere. The lines want the money in


DHB’s reserves to be ring fenced for use only in ferry terminal investment or returned to them. And if Terminal 2 does not go


ahead, the operators expect to see a significant reduction in tariffs as they will no longer be required for the project. The ferry companies have


already told the secretary of state for transport that they would reserve their position over the Harbour Revision Order necessary to transfer the existing port assets from the trust to a private company. “We will object severally or jointly to the SoS. We wish to see adequate safeguards first.” Robin Wilkins, managing


director of SeaFrance adds: “We want a clear, transparent relationship with our port authority and for them to understand the severe economic pressure operators currently face. They must realise that reckless tariff rises would impact our customers and the substantial number of jobs provided by us, both directly and indirectly, in the local community.” Robin Wilkins told FBJ that in


fact around half the £60m raised by the increased tariffs would now be spent on refurbishing and upgrading the existing terminal, which will have to soldier on unaided for at least the best past of the decade.


However, “Dover Harbour Board is proposing that the remaining half of the money is used to regularise the pension fund,” he says, adding: “We were misled in agreeing to tariff increases.” Now is not the right time


to levy increased charges on operators, struggling with falling traffic and freight and ticket prices, he continues, arguing that operator balance sheets are generally far weaker than those of the Dover Harbour Board. If and when privatisation takes


place, Robin Wilkins would also like to see adequate safeguards against punitive rises in handling charges. Dover Harbour Board reacted


angrily to the operators’ outburst. In a terse statement, it said “many of the statements made are inaccurate or simply wrong.” It added: “We were extremely surprised to receive a joint letter from P&O Ferries, SeaFrance and Norfolkline claiming that Dover Harbour Board has abused its monopoly powers. We were even more surprised and disappointed that customers, with whom we are still in the process of holding private discussions in relation to negotiating a new price path for


tariffs, would appear to have briefed the press before we were aware of the letter.” The ferry operators have cast


the port of Dover as the villain of the piece, but ultimately it is the Government, or more particularly the Treasury, that will decide how Dover’s cash pot gets used. Some might agree that the operators have a case, morally if not legally, but they are going to have to persuade the Government to hand over a fairly substantial amount of cash. Robin Wilkins added that he


is not against privatisation as such. It would allow the port to inject more money, more quickly into the business – raising money from port users through higher levies is a comparatively slow process compared with the capital markets. The Government


would presumably be against the idea of a trust port raising money in the capital markets, because this would count as public sector borrowing, something it has been doing its utmost to beat down to a more manageable level. It’s all a far cry from the


days when Dover enlisted Dame Vera Lynn to fight off a forced privatisation by a Tory Government back in the 1990s, but as director of port development, Mike Krayenbrink says, “the world moves on.” In all this, most operators


hasten to point out that they still have very good relations with the Harbour Board on a day-to- day operational basis – just as well given the extreme pressure that the port and operators are subjected to every day, even with traffic reduced by the recession.


Squeezing the last drop from Terminal 1


Meanwhile, the port will be turning its attention to getting the best out of the existing facilities in the Eastern Docks, or Terminal 1 as the port now prefers to call it. “Having completed the new dock entrance – which has made a huge difference – we’re now working on a range of improvements to get more throughput from our land and berths,” says director of port operations, Robin Dodridge. Some berths are now quite old and could do with thorough updating of control systems, and the port is also anxious to increase the number of long berths better suited to the new P&O ships due to come into operation next year.


Currently, there is one berth long enough for the


new ships, another will be lengthened by the end of the year and a third in around 18 months’ time. A fourth could also be readied, though with a little more work. The aim, says Robin Dodridge, is always to ensure that there is at least one more long berth than there are long ships in the Channel – though he adds that in emergency, the new ships would be able to berth on the shorter piers, though this would block off other vessels from the other side of the pier. “We’re probably at around two thirds of berth capacity now,” explains Dodridge, “and we expect to use much of that up before Terminal 2 opens.”


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