By: Director of Planning Services
Main Portfolio Area: Economic Development, Regeneration and Maritime
To: Cabinet – 21 August 2003
Subject: GUIDANCE AS TO FUTURE OPTIONS FOR COMMERCIAL PORT AND PORT LAND AT RAMSGATE
Classification: Unrestricted
Summary: Authority is sought to appoint a specialist consultancy to advise Members on the economic viability of the Port and which will enable Members to decide on the basis of objective opinion as to the future course of action that should be adopted.
For Decision
1.0 Introduction
1.1 Objective professional economic advice is required to enable Members to have a constructive debate as to the future of the Port and Port land. This report puts forward the initial steps needed to obtain that advice.
2.0 Financial Implications
2.1 It is likely that such a study will be essentially a desktop study by specialists in transport economics, supported by appropriate Development Surveyors. The likely cost of such a study is thought to be in the range of £30-40,000.
2.2 No budget provision has currently been made for this work. It will therefore have to be obtained from contingency reserves, if Members decide to proceed.
3.0 Background Information
3.1 Members have for several years struggled with the operation of the Commercial Port at Ramsgate. The current operation does not produce a profit; there is no immediate prospect of a second operator and Port fees are a constant contentious issue for the current operator. This against a background of forecast expansion in ferry traffic, but also of stiff competition and potential capacity expansion elsewhere, notably in Dover.
3.2 To enable Members to conduct an informed discussion as to the future of the Port, some objective professional advice is required as to the market conditions, the level of demand likely and the supply of capacity to meet that demand.
3.3 Alternatively, the Council has on various occasions considered the use of Port land for non-Port related development which would bring a substantial capital receipt and for the right mix of development would be likely to add to the regeneration prospects of Ramsgate.
3.4 In order to facilitate a constructive debate as to the development of a 5-10 year Business Plan for the Port and Port land, objective specialist advice is required.
3.5 Attached to this report Members will find a first draft of a potential brief to consultants which is the first step towards obtaining objective information as to the potential options
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for inclusion in the appropriate Business Plan. The document is in draft form and is currently out to internal consultation to ensure that it addresses the issues which the Council wishes addressed.
Risk Assessment
3.6 The Port and Port land make up the majority of the Ramsgate Renaissance landholding which is the core strategy for the regeneration of Ramsgate. Lack of clarity as to the future of the Port is detrimental to any form of development. At various times, Members have indicated that if the Port does not succeed, alternative development options will be pursued. However, that very lack of certainty as to future operations undermines the market potential of the site both for Port activity and for non-Port activity.
3.7 The development market requires a degree of certainty as to the Council’s future position in relation to this land and it is essential if that certainty is to be given that the Council must have an informed discussion as to future options and develop an agreed Business Plan for the immediate and medium term future that will give all developers certainty as to what they may expect.
3.8 Failure to have such a discussion and to produce a clear statement of intent is likely to undermine developer confidence and put at risk the Ramsgate Renaissance Strategy.
3.9 Objective professional economic advice is the cornerstone to such a debate.
4.0 Recommendation
(a) Thanet Members accept the principle of obtaining objective professional advice as outlined above and in the attached brief;
(b) that the draft brief be amended to take on board where feasible the comments of those to whom it has been copied;
(c) that the Chief Executive be given delegated authority to approach a number of specialist consultancies as outlined in the brief to receive proposals to undertake the specified work;
(d) that a budget of £30-£40,000 be agreed, the funding being obtained from contingency reserves.
5.0 Decision Making Process
5.1 This matter does involve making a key decision which has not been included in the Forward Plan. It is impracticable to defer making a decision because the delay would cause the report to miss the next Council Meeting and delay the process of obtaining advice to an unacceptable degree.
5.2 The decision recommended is in line with the Policy Framework but contrary the Budget approved by Council and must be referred to full Council for decision.
5.3 The decision of Cabinet is subject to call in.
6.0 Background Papers
6.1 None.
Contact Officer: Mr R T Herron - Director of Planning Services – Tel: 577005
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BRIEF TO CONSULTANTS
OPTIONS FOR THE FUTURE OF THE PORT OF RAMSGATE
SUMMARY
The Council is seeking an objective view as to the economic future of the Port of Ramsgate (Commercial Port).
Ramsgate currently offers a freight only service to Oostende, operated using five ships by Transeuropa. Over the past few years various discussions have been undertaken with a view to providing a second operator, currently without success. Freight traffic continues to increase steadily in line with the general growth in freight movement across the Channel. The land reclaimed for Port activity is also of potential interest for non Port related development to complement the marina and other activities of the Royal Harbour and to facilitate the economic regeneration of Ramsgate.
The Council, therefore, seeks objective support to facilitate an assessment as to the options available and to enable it to decide upon which course of action to follow – to maintain the Port in full operation, in the expectation that business will improve sufficiently to both make the Port economically viable and, if successful, to contribute to the local economy, or, to seek alternative development opportunities (either in part or in whole for the site) which would bring a financial return to the Council and which will also contribute to the interest and character of the area and where the right development will contribute to the economic regeneration of Ramsgate.
What is sought, therefore, is an objective, essentially desktop study to enable the Council to understand the background economics to current and future Cross Channel activities and the economic case for both options, (or for alternative options) which will facilitate the Council in the development of a business plan for the future of the Port and Port land.
Consultants are required with expertise in market/economic analysis, preferably with an experience in looking at the shipping industry (or other similar transport industries); property market expertise, including valuation; financial and cost consultancy, and business planning.
BACKGROUND
1. Ramsgate Port was created approximately 25 years ago. It is essentially constructed on reclaimed land to the west of the original Royal Harbour. During the 1980’s and early 1990’s it was UK Home Port to the Sally Line which ran passenger and freight services to Dunkerque and latterly to Oostende. At the peak it operated a throughput of 3 million passengers per year and ………… freight units per year. Sally/Hollyman (as it became) ceased operation in 1998?
2. As a result of the problems of vehicular access through the town of Ramsgate caused by the Port, a new Port Access Road was constructed following a Public Inquiry in 1997? The cost to the public purse was some £30 million. The road was justified on the basis of the traffic carried at that time and subsequent closure of the Sally/Hollyman operation and the introduction of Transeuropa has meant that the Port Access Road carries only a fraction of its traffic capacity.
3. The Council at various times has met with other operators with a view to expanding the Port operation to include a second ferry operator. Potential routes to Boulogne and Dunkerque have been examined by operators who, having spent considerable time looking at the prospects, decided either not to pursue the opportunity, or to operate from Dover instead. There is currently no additional ferry operator in view.
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4. The Port has developed limited additional capacity in aggregates and there is certainly the possibility of expanding this market. However, it is likely that in order to do so, further infrastructure investment would be required to create new alongside berthing facilities and aggregate handling facilities. This has a potential environmental consequence, particularly if other developments are contemplated in the Port area, ie residential/leisure use. In addition, whilst there is undoubtedly a future market in aviation fuel for Manston airport, that market does not currently exist and may not exist for some years depending on the level of future development of Manston Airport. Again, however, there are major environmental consequences to bulk handling aviation fuel in what is an environmentally sensitive location, which would have to be resolved if the operation is to become economically significant.
5. Recent market forecasts (most recently in the SEAPLAG study) indicate that there is substantial growth potential in both the freight and passenger market across the Channel. However, the Council is aware that any spare capacity is likely to be competitively sought by both the Channel Tunnel and the Port of Dover. The Council is aware that the Port of Dover, particularly, has plans to develop additional berths for ferry services and is contemplating Port expansion to the west at some date in the future. Dover is also undertaking a 20-year Masterplan for the development of Port services. Ferries are also growing in size to cater for an expected market expansion, and require deeper waters to operate effectively.
6. In addition, new road proposals to Felixstowe from the Midlands and to Portsmouth/Plymouth from the Midlands, offer the opportunity for diversification/route competition, particularly for freight units and passenger traffic whose source is in the Midlands and the North of England and who do not necessarily require a short sea crossing.
7. The Council, supported by Kent County Council and SEEDA, has recently undertaken a Masterplan study of the Port and surrounding Ramsgate Waterfront area, which looked at potential alternative uses and development opportunities in the area. The Masterplan Study, together with the component parts of that work looking at the potential of the Port, will be available to the selected Consultants.
8. The Council has at various times contemplated alternative development of parts of the Port area. Most recently (1998/99) when expressions of interest were sought for the development of the area of Port land nearest to the Royal Harbour, for a mixture of residential and commercial development (‘café society’) with the possibility of an hotel. Developer interest at the time was disappointing and the project has been shelved pending resolution of alternative residential and commercial development opportunities on the eastern seafront.
AIMS AND OBJECTIVES
The overall objective of the study is to provide expert and independent advice to the Council as to the economic future of the options identified above, based on an understanding of the potential development of ferry and short sea shipping business across the Channel and the potential which Ramsgate Port has in sharing in that market.
By way of comparison, the Council also wishes to know what is the potential for alternative development, either in whole or in part of the Port land with advice provided to the Council say for a 10 year business plan, identifying the opportunities that are likely to arise from an economic appraisal of these options.
THE STAGES OF THE WORK
Stage I – Market Analysis and Objectives
The first stage will involve an assessment of market conditions prevailing in the shipping industry across the Channel and, to the extent that it impacts on Channel operations, in other areas. The
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Consultants appointed will have or obtain a first hand knowledge of market conditions, potential demand and available and planned capacity to meet that demand.
The Council has already invested considerable time and effort in producing detailed work in relation to options for development of the Ramsgate Waterfront area, including the Port, through the development of the Masterplanning exercise and the appointed Consultants will be expected to review that work and familiarise themselves with its content.
At the end of Stage I, the Council will expect to receive a report from the Consultants to identify market demand and potential for port development and separately, for alternative forms of development, which will address the following issues:
♦ A review of the existing documentation.
♦ A market assessment summarising the key strengths, weaknesses, opportunities and threats for the Port and to include an assessment of the current and projected demand in the market place, both for Port activity and for alternative forms of development.
♦ An appreciation of developments planned, or being undertaken at other Ports likely to affect capacity and future demand across the Channel.
Stage II – Identification and Appraisal of Options
Stage II of the study will identify options. The Council foresee two basic, but opposed options, but will be advised as to whether there are sub options or part options to be assessed.
On the property development side, the site has potential at maximum usage for development of between 30 and 40 acres of reclaimed land (with the elimination of Port). Clearly, such a large development would have major consequences for the property market and could not be undertaken nor assimilated into the local market conditions other than as a phased development. The Council requires advice, therefore, as to whether this option is viable given the market assessment undertaken at Stage I. Various sub options for smaller areas of development could be put forward for assessment, some of which would allow a mixed development of Port activity and other non-Port activities on a phased development.
In respect of Port development an option which envisaged expansion of the Port could potentially require new reclaimed land or alternative land acquisition. If such an option were to be considered, the Council will require advice on the likelihood of such development being justified, being acceptable environmentally, and being economic.
If the Port has an independent economic future, is there a case for the Council opting out of either the ownership or management of the Port in favour of a “bigger, more dedicated player”, to provide investment in infrastructure and marketing.
Does Ramsgate Port have a justifiable economic role given the potential plans for Dover Harbour and the strong market share of the Channel Tunnel, in the short to medium term.
Given the investment in Port infrastructure at Ramsgate (ie the new Harbour Access Road) is there a case for Ramsgate to become an overspill of Dover Harbour, rather than permit Dover to expand further (in other words to make the maximum use of the existing infrastructure) – and if so, is this commercially viable as an option for both Ports.
What is the economic case for a mixed development of more constrained Port development, alongside a significant property development, which would underpin Port activities at a level not dissimilar to the current level or not substantially expanded?
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The options issues will be contained in a written report to be presented to and discussed by the Steering Group before proceeding to Stage III.
Stage III – Consultant’s Recommendations
Having considered all of the potential options and sub options, analysed the market capacity and potential demand, the Consultants will be required to put forward an argued case contained in a written report, based on best financial information and professional advice about the state of the market to guide the Council in assessing the options referred to. The report will contain a summary of the economic and financial impacts and benefits of each option and advise on the appropriate course of action which the Council should take in respect of the development of the Port and Port land. The study should also include an appraisal of the risks involved in pursuing a particular course of action and provide a balanced Risk Management Plan related to the proposals, a), to enable the Council to recognise both the upside and downside of any proposal, but also b), to permit discussion of potential mitigating actions in the event of a particular course of action being followed.
TIMETABLE
It is expected that the study work will be undertaken over a two-month period commencing in October 2003. During this period the Consultants will be expected to attend meetings with the Steering Group from the Council made up of Council Members and Officers. At the end of each stage of the work the Steering Group will receive interim feedback and guidance on the various parts of the study and consider a draft of each phase of the report before final presentation.
WORKING ARRANGEMENTS
Day to day contact will be through ______, as the nominated study co-ordinator on behalf of the Council. Management of the Consultant’s contract and contractual obligations will be handled by the Council.
It is particularly stressed that much information is already held by the Council and full use should be made of this before undertaking other possible duplicate work. All additional studies should be justified to the project manager before being undertaken.
SELECTION OF CONSULTANT
The Council intends to approach X Consultant Companies, judged to have the experience to carry out the study. If the lead Consultant does not have the necessary skills within their team, submissions should indicate how the team will address the relevant issues, and identify subcontracting arrangements. Each Consultant Company should provide written information on:
(a) The background experience of the company (or companies) and a particular track record of similar projects, together with examples of those successfully implemented.
(b) Details of the methods to be used, tasks to be performed (indicating the level/man hours of work judged to be involved) and an appraisal of the strategy to be adopted in preparing the study.
(c) Names of Consultant staff to be assigned to the study, together with individual responsibilities and past experience (including the identification of a named Managing Consultant). In addition, the sponsors expect named individuals, at a senior level, to be identified against the ‘experience’ identified on pages 1 and 2 of the brief.
(d) A draft work programme, providing the timescale and completion dates for the various phases of the study.
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(e) Similar details of any backup support or subcontracting arrangements which may be considered appropriate.
(f) Details of charges based on individual fee rates and days allocated, travel and subsistence expenses, costs of printing and producing materials.
The Council expect to receive 5 copies of the final study in colour, one of which should be unbound and be suitable for use by the Council for copying purposes. Fee estimates should allow for meetings with the Project Steering Group and for a presentation of the final report at a formal but private Council Meeting.
Following the submission by Consultants and the evaluation of the information supplied, a final selection of the Consultant will be made based on the criteria of value for money, imaginative approach and practical feasibility.
All parts of the proposed strategy and presentation material will be the property of the sponsors. It is anticipated that the Consultant will be commissioned no later than the end of October.
PAYMENT OF FEES
It should be noted that the Council would expect to pay no more than 10% of the agreed fee as a retainer within two weeks of formal appointment. A further 30% will be payable on satisfactory completion of Stage I and acceptance of the Stage I report. The remainder of the fee will be paid on satisfactory completion of the final report and delivery of 5 copies of the final study to the Council.
DISCLAIMER
Every effort has been made to ensure that the information contained in the brief is accurate. However, the sponsors accepts no responsibility for inaccuracies or for changes in the programme which may be necessary during the period of the brief or the commission. The Council reserves the right, having heard submissions, not to appoint. The Council accepts no responsibility for aborted work due to any changes in the programme, or, in the event that no appointment is made.
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THANET DISTRICT COUNCIL Maritime Division
A STUDY INTO THE POTENTIAL OF RAMSGATE NEW PORT 2002 TO 2017
Prepared by: Captain Ken Gray
Dated: February 2003
RNP Study/KG/26/02/03 Rev001 1
EXECUTIVE SUMMARY Ramsgate New Port is currently the third largest channel port and the second largest municipal port in England and Wales. The objective of this report is to evaluate the potential of Ramsgate New Port and its ability to operate as a viable transport link on the south east of England during the period 2002 to 2017. 15 years is a comparative short period for a port study when considering transport infrastructure and major capital investment. The SEAPORTS study 2002 has indicated that a realistic annual growth in cross channel freight is 3.7% and passenger traffic of 4.3%. It is projected that by 2016 there will be a shortfall in channel port capacity in excess of 1,000,000 freight units per year. These figures are based on current port facilities reaching full capacity and proposed South Coast Ports improvements being completed. In addition, it is projected that the Thames and Medway ports will achieve an annual growth of 2.5% in dry bulk commodities. However, there will still be an increase in demand for channel ports to provide additional dry bulk handling and storage facilities. Ramsgate New Port is well placed geographically to play a considerable role in the development of ro-ro cross channel services and has an estimated port capacity of 0.5 million freight units and 5 million passengers per year (based on the current land allocation). The port is well placed by having both the M2 and A299 easily accessible and an access road direct into the port opened in 2000. The port is currently limited by having only one ferry service operator trading between Ramsgate and Ostend, this service has shown significant growth, however, the port has obtained very limited benefit from this increased trade. It is essential that a second operator is incurrage into the port, thus increasing stability of port operations to allow future investment. It is vital that a passenger service is re-established from the port, as this will both increase the profile and public awareness of the port. The port is currently owned and operated by Thanet District Council, to enable the port to reach its full potential it is essential that there is stability of management. That sufficient funds can be made available in the future, to allow the port to meet demands placed on it by existing and future customers. The port has relied heavily on obtaining supplementary credit approvals (SCA’s) to fund major maintenance projects. This form of borrowing will cease in 2004 and be replaced by prudential borrowing, currently the effects of these changes in financils controls placed on the Council are unknown.
RNP Study/KG/26/02/03 Rev001 2
A) RAMSGATE NEW PORT
RNP Study/KG/26/02/03 Rev001 3
INDEX
1. - Introductiion
1.1 Target Audiience
1.2 Consulltatiion and Supportiing Informatiion
1.3 Objjectiive of the Study
2. - Hiistory of the Port
3. - Current Port Operatiions
3.1 Ro-Ro Operatiions
3.2 Aggregate Imports
3.3 Other Port rellated busiiness
4. - SWAT Anallysiis of Ramsgate New Port
5. - Tradiing Patterns
5.1 Projjected demand for freiight and passenger traffiic 2000/2016
5.2 Current South East Sea ports and the Channell Tunnell to meet demand
5.2.1 Port of Dover
5.2.2 Channell Tunnell
5.2.3 South East Ports
5.3 Projjected Road Traffiic Demands
5.4 Movement of traffiic from road to raiill
6. - Trade Diiversiifiicatiion – Ramsgate New Port
6.1 South East Port Demand Forecast iin ktonnes for periiod 2000/16
6.2 Current potentiiall of Ramsgate New Port
6.3 Potentiiall for diiversiifiicatiion and growth at Ramsgate New Port
6.3.1 Ro-Ro Traffiic
6.3.2 Passenger Traffiic
6.3.3 Aggregate Operatiions
6.3.4 Oiill Termiinall
6.3.5 Land Potentiiall
RNP Study/KG/26/02/03 Rev001 4
7. - Port Structures and Challllenges
7.1 Fiinanciiall Structure
7.1.1 Trust Ports
7.1.2 Priivate Ports
7.1.3 Muniiciipall Ports
7.2 Management Challllenges
7.2.1 Locall Government Structure
7.2.2 Fiinanciiall Controlls
7.2.3 Human Resources
7.2.4 Viisiion
7.2.5 Long Tern Structure Pllanniing
7.2.6 Publliic Expectatiions
8. - Port Management
8.1 Retaiin the Port iin the Counciills Management
8.2 Lease or Sellll the Port to a Priivate Operator
8.3 Joiint Venture Partnershiip
8.4 Other Optiions
9. - The Way Forward
9.1 Short Term 0-5 years
9.2 Mediium Term 5-10 years
9.3 Long Term 10 – 15 years
RNP Study/KG/26/02/03 Rev001 5
1.0 Introduction: 1.1 Target Audience: The target audiences for this study are Members and Officers of Thanet District Council with the prime objective of evaluating the future viability of Ramsgate New Port. The port industry is currently undergoing considerable change and is more accountable in its management, financial, operational and environmental duties and services. This document may also be used as information to port and other stakeholders. 1.2 Consultation and Supporting Information: In drafting this study information from the following documents have been included:
- Ramsgate Renaissance Implementation Strategy by MDS Transmodal Limited dated June 2001 - South East England, London and East of England Regional Ports Study by WSP dated June 2002 - London Outer Ring Road Study - Dover Harbour Board traffic statistics - Eurotunnel traffic statistics - Information from The British Ports Association - National Government Port Statistics – Department of Transport - Department of Transport (Ports Division) - Nautical and Ports Publications - SERA report on future airport development - DTLR “Modern Ports – A UK Policy” - DTLR Planning Policy Guidance Note 13 (Transport, March 2001)
RNP Study/KG/26/02/03 Rev001 6
1.3 Objectives of the Study: The objective of this study is to review the potential of Ramsgate New Port for the period 2002 to 2017 taking into consideration the following factors:
Trading patterns: - Projected demand for freight and passenger traffic on the channel routes. - The opportunity of the current south-eastern seaports and the channel tunnel to meet the demands. - Projected road traffic demands placed on the M25, M20 and M2 and the effects on the geographic locations of channel ports.
- The potential to reduce road traffic congestion by the switching of road freight onto the railways and the effect this may have on the development of Ramsgate New Port. Trading Diversification: - The potential for diversification into other port related trades, based on links with the regeneration of Thanet and South East Kent.
- The potential for port development to meet increased trading demands. Port Potential: - Development of existing ro-ro trading. - Development of new ro-ro trades. - Development of passenger users.
- Efficient use of land and facilities Port Restrictions: - Financial restrictions - Management restrictions.
- Environmental restrictions . Port Management: - Retain the port in the council's management. - Lease the port to a private operator.
- Joint venture partnerships. Way Forward: • Five year short term analysis. • Ten year medium term analysis. • Fifteen year long term analysis.
RNP Study/KG/26/02/03 Rev001 7
2.0 History of the Port: Thanet District Council developed the port originally by reclaiming 10 acres of land and the installation of one ro-ro ramp in 1979 at a cost of £6.25m; the land was leased to Sally Line for 90 years. In 1983/4 a breakwater was constructed to give sheltered moorings and in 1985 an additional two ro-ro ramps were installed with adjoining reclaimed service land and berth approaches were deepened to 6.0 meters below chart datum. On completion of these works, the lease granted to Sally Line by the Council was extended to 125 years. In 1994, No. 3 berth was converted to a two deck male facility to accommodated vessels of up to 170 meters in length and the channel and berth approaches were deepened to 7.5 meters below chart datum. In 1997, a small aggregate import facility was constructed as a joint venture between the Sally Line and Brett Aggregates Limited. On the 21 November 1998 Sally UK Holdings Limited surrendered the port lease to Thanet District Council and the port became known as Ramsgate New Port with operational management undertaken by the Maritime Division of the Council. In June 2000, a new access road was opened to the port at a cost of £32m comprising an 800 metre tunnel and link road. The port currently comprises of 32 acres of land, three ro-ro berths an aggregate berth, full passenger terminal facilities, three weighbridges and supporting buildings. Facilities are available in the port to handle 500,000 freight units and 5 million passengers. 3.0 Current Port Operations:
3.1 Ro-Ro Operations: Ramsgate New Port currently supports a successful ro-ro freight service to Ostend, the line being provided by Transeuropa Shipping Lines, employing four small ro-pac vessels and one freighter, providing 51 sailings per week. Stevedoring is provided by the ferry operator and all plant is supplied by the Port. Current and projected freight traffic figures 1998 to 2005:
(figures in unit loads)
200000
150000
100000
50000
0 1998 1999 2000 2001 2002 2003 2004 2005
The figures shown for 1998 represent up to November 1998 trading by the previous operators Sally Line. Estimates for 2003 based on a 15% annual growth, 2004 based on a 15% annual growth and 2005 based on a 10% annual growth.
RNP Study/KG/26/02/03 Rev001 8
3.2 Aggregate Imports: The current aggregate import facility can accommodate vessels of up to 60 meters in length carrying 1,200 tonnes of cargo. The berth consists of a barge secured to piles with a conveyor system to the shore, the product is collected from the bottom of the conveyor system by a mechanical shovel and stored in bins. The capacity of the bins is approximately 4,000 tonnes utilising one acre of land adjacent to the berth. The material imported comprises type one, crushed slag and crushed limestone; used for road and building sub base. Current and projected imports of aggregates 1999 to 2005: (Figures in tonnes)
120000
100000
80000
60000
40000
20000
0 1999 2000 2001 2002 2003 2004 2005
The projections shown for 2003/5 do not take account of any major road projects taking place within the Thanet area and are based on a minimum throughput of 50,000 per year plus a 10% annual growth. The figures shown for 1999 and 2001 indicate the construction of the port access road and the extension to the apron parking area at Manston airport.
3.3 Other Port related business:
The port currently generates income in the following areas:
- Short term land rental.
- Hire of plant and machinery.
- Hire of undercover storage.
- Hire of office space.
- Provision of import and export clearance documentation.
RNP Study/KG/26/02/03 Rev001 9
4.0 SWOT Analysis of Ramsgate New Port:
STRENGTHS: • Land and berthing capacity. • Access at all states of the tide and in most weather conditions. • Capacity to accept male and female configured ships. • Good road access direct to the port. • Short pilotage. • Capacity to accept ships up to 200 meters in length with limited port modifications. • Full passenger capability. • Geographically well placed to channel and southern north sea continental ports. • Small overheads, allowing discounts to be offered on the published tariff.
WEAKNESSES: • No potential for railhead link. • Lack of opportunity to raise development capital to attract new business. • Not considered a serious player in the market. • No current passenger service. • Overshadowed by the Port of Dover and the Channel Tunnel. • Current ferry operator not considered a major player on the channel routes. • Difficult to attract new business in current trading climate.
OPPORTUNITIES:
• In a good position to take advantage of future expansion of channel market. • Well place to attract business from growth in Manston airport.
RNP Study/KG/26/02/03 Rev001 10
• Can provide a more tailored service to customers rather than the larger payers of Dover and the tunnel. • Available space to diversify into other trades and build further berths without effecting core business of ro-ro operations. • Redesigning the port layout can be achieved with minimum expenditure. • Debt free port.
THREATS:
• Loss of current operator. • Being forced to provide high discounts on port charges to retain customers. • Lack of investment capital. • Major mechanical failure. • Price war on channel routes attracting cargo away from the port. • Not considered a serious player in the market. • Loss of Land to other uses could effect commercial port opportunities. 5.0 Trading Patterns:
5.1 Projected demands for freight and passenger traffic 2000/2016:
The resent South East and Anglian Ports Local Authority Group (SEAPLAG) commissioned a report published in June 2002 by consultants WSP in association with Baxter Eadie Limited, Marcial Echenique & Partners and the SQW/BBP Alliance. The brief for the study was to “develop a regional framework that provides strategic and transport guidance for the sustainable development of ports and related infrastructure in the East of England, the South East and London for inclusion in Regional Planning Guidance, Regional Transport Strategies and the Mayor’s Spatial Development and Transport Strategies for London”.
The study covered all sea ports between King’s Lynn to the north and Poole to the south including the channel tunnel as follows:
Eastern Region South Eastern Region South Western Ports Ports Region Ports King’s Lynn Thames Port Poole
Great Yarmouth Sheerness
Lowestoft Chatham
Felixstowe Ramsgate
Ipswich Dover
Harwich Channel Tunnel
London Folkestone
Tilbury Newhaven
Shell Haven Shoreham
Portsmouth
Southampton
RNP Study/KG/26/02/03 Rev001 11
The study projected the following growth in sea traffic through the ports included in the study as follows:
(Figures are shown in ktonnes) with base figures year 2000
Year Liquid Dry Bulk Other Ro-Ro Containers Total Bulk Cargo's
2000 53,509 31,378 12,900 52,010 41,989 191,786
2006 54,847 34,662 13,710 66,460 52,050 221,728
2011 54,887 39,437 14,511 79,228 60,296 248,359
2016 54,056 46,383 15,993 92,440 69,362 278,200
% Annual Growth +0.1% +2.5% +1.4% +3.7% +3.2% +2.4% 2000/16
The figures set out above showing a 59.2% growth in ro-ro tonnage through southern ports in the period 2000 to 2016 are considered by the ports industry as being a conservative estimate.
Passengers: Passenger traffic was severely effected by the loss of duty free concessions and has shown a recovery in 2002, which is expected to continue with some 22.3m passenger passing through ferry ports in the UK during 2002 of which 16.7m used East Kent ports. The SEAPORTS study projects a growth of 4.3% per year in passenger traffic through channel ports during the period 2000 to 2016, this would result in a growth from 18 million passengers in 2000 to 36 million in 2016. When comparing these figures to the projected growth in freight through channel ports of 3.7% per year. It is apparent that both the ports and roads infrastructure in the southeast will be under pressure to meet the demands placed upon them. Passengers, cars and coaches on channel routes (including Eurotunnel) 1996 to 2000
1996 1997 1998 1999 2000
Passengers 31,000,000 32,700,000 33,600,000 31,000,000 26,800,000
Cars 5,629,000 6,326,000 6,833,000 6,407,000 5,490,000
Coaches 227,000 231,900 250,200 238,800 229,500
N.B The above figure represent all South Coast Port passenger operations.
5.2 Current South East Sea ports and the Channel Tunnel to meet Demands: The Ro-Ro traffic estimates are broken down as follows:
Year Ro-Ro Demand Average vehicle Vehicle Demand (ktonnes) cargo weight In thousands
2000 52,010 12.5 4,191
2006 66,460 12.7 5,233
2011 79,228 12.9 6,142
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2016 92,404 13.1 7,054
% annual growth +3.7% (59.2%) +3.4%(54.4%) 2000/16
It is predicted that by 2016 there will be a shortfall in capacity through southern ports of 1,000,000 vehicles per year taking into consideration proposed port developments.
Current capacity in the Dover Straits ports is 3.3m vehicles with proposed developments rising to 5.5m vehicles in 2016 if all projects proceed.
5.2.1 Port of Dover:
The Port of Dover is able to increase capacity by improving both vehicle and passenger handling facilities and the construction of addition berths. Currently the available land and capacity to provide berthing slots restricts the port. Traditionally ports have expanded through land reclamation within their statutory jurisdiction, the increasing environmental lobby has resulted in this being a time consuming and costly method of gaining land with no guarantee of obtaining approval.
Dover has plans for four new ro-ro berths in the eastern docks; work on two berths has commenced for completion in 2003/4. There are plans to develop short sea shipping operations in the western docks by reclaiming a large area of land, however, this is close to an SSSI and thus it is unsure if the project could proceed.
There are currently capital development projects taking place at Dover to the value of £39.5m the largest project being the construction of No. 8 & 9 ro-ro berths in the eastern docks to the value of £30.6m. No.8 berth will be operational by the end of 2003 and No.9 will come on line in the Spring of 2004.
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Dover Harbour Ferry Traffic Figures 1998 to 2002
The figures set out below include the services operated by P&O, Sea France, Norfolk Line and Hoverspeed.
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0 1998 1999 2000 2001 2002
The comparison growth figures for 2001/2 were as follows:
(i) Passenger Traffic +2.8%
(ii) Car Traffic +3.0%
(iii) Coach Traffic +7.9%
(iv) Freight Traffic +4.6%
(v) Number of vessel movements - 4%
It is interesting to note that with a 4% reduction in vessel movements Dover are investing a large capital sum in building two new berths. This is contrary to the projected shipping trends, which indicate the next generation of channel rout vessels will be larger in capacity but fewer in number. Dover is currently seeking consultants to undertake a 20 year master planning study of the port.
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5.2.2 Channel Tunnel:
The tunnel can increase its capacity by improved rolling stock and trains and by efficiency in handling shuttles, however, there is a limit to the number of slots available through the tunnel both on efficiency and safety grounds. The tunnel will continue to be a major player second to Dover on the channel routes; however, it is limited in the level of expansion available to the operators without constructing a second tunnel with the associated high capital costs.
On the Dover / Calais route the market share of traffic is split as follows:
Dover Traffif 1998 1999 2000 2001 Cars 48.50% 47.20% 47.60% 50.10% Coaches 61.50% 65.70% 65.10% 64.30% Freight Units 64.80% 64.20% 56.40% 59.60% Eurotunnel Traffic Cars 49.30% 51.30% 51.00% 49.90% Coaches 38.50% 34.30% 34.90% 35.70% Freight Units 30.00% 32.30% 39.40% 40.40%
5.2.3 South East Ports
Folkestone:
It is unlikely that Folkestone will re-open as a ferry port; currently studies are taking place to develop the port into a bulk cargo terminal, one ship discharging soda ash in 2002.
Thames:
The current ro-ro operation at Dartford may move to Shell Haven, this will both improve facilities and capacity.
Thames port has considerable land available for development; however, much of this land is environmentally protected.
Medway Ports:
The ports of Sheerness and Chatham are currently utilising available land for trade cars, fresh fruit, forest product and general cargo operations. There appears currently to be very little interest in developing a major ro-ro terminal facility.
5.3 Projected Road Traffic Demands:s
Concern has been expressed by the Highways Agency that current and future expansion of the Port of Dover could have a considerable effect on the capacity of the M20, which is also feeding the Channel Tunnel. In additional the London Orbital Study has recognised the need for improved traffic management systems on the M25, these may initially include tolls and improved congestion management systems.
The Board of the Port of Dover has recognised that to sustain projected growth they will, in the future, enter into partnerships with the Highways Agency to improve the port access. This is a total new concept as previously ports have resisted becoming involved in providing funding for public highway projects.
With the widening of the M2 in the Medway area this will assist in reducing pressure on the M20. There appears to be no short term plans to improve the link between the A2 and Dover.
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Ramsgate is well placed to take advantage of the improvements that have taken place on the M2 and A299 in recent years, reducing journey time from the M25 to Ramsgate New Port to less than one hour.
It is clear that by 2017 the current road infrastructure will be pressed to meet demands placed on it by the channel ports, this will have a significant effect on the ability of both Dover and the
Channel Tunnel to meet increased trade.
5.4 Movement of traffic from Road to Rail:
Successive governments have tried to encourage freight traffic to move from road haulage to railways, levels of success have been limited mainly due to cost and available rolling stock. Ports such as Dover, Folkestone and Poole historically had direct links to the rail network; however, these have fallen into disuse and would be very expensive to reactivate. As road congestion increases, customers will demand ports reduce rail costs and ports to reinstate their railheads. However, it is estimated by the ports industry that the maximum of channel freight that could be switch from road to rail would be 20%.
It would not be possible to link Ramsgate New Port to a railhead, a study was conducted into the feasibility of introducing this link. However, the cost, environmental impact and the area of land required for marshalling yards limited the port future potential. It is not expected that any major switch from road to rail haulage would effect the future development of Ramsgate New Port beyond 2017. 6.0 Trade Diversification - Ramsgate New Port:
The geographic location of Ramsgate New Port is such that it is well placed for short sea shipping trades and the current port facilities are limited to stern operating ferry vessels. The port has sufficient available land and deep water to allow future diversification into aggregates, forest products, oil imports and grain exports. The current small aggregate import facility, operated by Bretts Aggregates, is limited to vessels of up to 60 meters in length, however, it has been demonstrated using only one acre of storage land that over 100,000 tonnes of material can be handled through the port and 3,000 tonnes stored onsite.
It is recognised that the core business of Ramsgate New Port will remain ferry traffic, however, to take advantage of projected future short sea shipping growth the port will need
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to invest in alongside quay facilities, these can be achieved within the current statutory jurisdiction of the Port Authority.
The advantages of Ramsgate over its neighbouring competitor ports is that there is available land within its current area bounded by the stone breakwaters although adjoining a SSSI, RAMSAR and Marina SAC sites would be within the Governments recommendations. Current government policy is that Port Authorities should develop, firstly within their current jurisdiction before any approvals or requests for extension of jurisdictions can be considered.
6.0 South East Port Demand Forecast in ktonnes for Period 2000 to 2016:
Year Liquid Dry Bulk Other Ro-Ro Container Total Bulk Cargoes s 2000 53,509 31,378 12,900 52,010 41,989 191,786 2006 54,847 34,662 13,710 66,460 52,050 221,728 2011 54,887 39,437 14,511 79,228 60,296 248,359 2016 54,056 46,383 15,993 92,440 69,362 278,200 % Annual Growth +0.1% +2.5% +1.4% +3.7% +3.2% +2.4% 2000/16
To meet these high increases in trade through the southeast ports the major ports of Felixstowe, Harwich, London, Medway and Dover will require considerable capital investment.
This investment will primarily be in the areas of ro-ro, containers, trade cars and perishable goods, which are high value cargos. It is less clear how the demand for dry bulk and other cargoes will be achieved, these cargo's comprising aggregates, timber, raw materials, grain, agricultural fertilizers, etc.; these cargo's are low value and in some cases involve potential environmental pollutants.
6.2 Current Potential of Ramsgate New Port:
The current parameters of Ramsgate New Port in its current trading configuration are as follows:
Available Land: 32 acres
Channel Depth: 7.5 metre below LAT
Turning circle depth: 7.5 metres below LAT (currently 6.0 meters maintained)
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Ro-Ro berths: 3 (max size vessels one 140 metre, two 160 metre with 6.5 metre draft)
Maximum size of vessel: 180 metre in length with 7 metre draft (tidal restricted)
Aggregate berths: 1 (max size vessel 60 meters with 4.0 metre draft)
Potential freight unit potential: 500,000 per year
Passenger facilities capacity: 5,000,000 passengers per year
Potential aggregates capacity: 250,000 tonnes per year
6.3 Potential for diversification and growth at Ramsgate New Port:
6.3.1 Ro-Ro Traffic:
Due to the potential congestion expected to be placed on other channel ports during the period covered in this study Ramsgate is well placed to play a contribution in meeting the demand for increased freight and passenger facilities. However, this can not be achieved without substantial future investment for current berth upgrades and the construction of a fourth berth to accommodate vessels up to 180/200 meters in length with a draft of up to 7 meters. Ramsgate can achieve all the anticipated demands placed upon it within the current land allocation and water jurisdiction.
An indication of the costs involved in meeting the demands placed on the port.
a) Conversion of current No.2 berth to accommodate two deck loading and 180 metre length vessel – estimated cost £4/5m.
b) Dredging of turning circle to accommodate a 200 metre vessel with a draft of 7.0 metres – estimate £1.3m.
c) Conversion of No.1 berth to fast ferry passenger/freight berth to accommodate vessels up to 140 meters in length with a draft of 5 metres – estimate £800k.
d) Construction of a fourth Ro-Ro berth and possible alongside facility on Western breakwater £7m.
e) Development of port land to meet growth in trade 500,000 freight units and 5m passengers including improved passenger handling facilities – estimate £2.5m.
The project costings set out above are for budget purposes only and can be introduced as and when trade demands.
6.3.2 Passenger Traffic:
2002 demonstrated an upturn in passenger traffic using cross channel routes, which is a turning point since the loss of duty free allowances. It is predicted that this increase in trade will continue.
Ramsgate is well placed to support passenger service to the lower north sea ports, Belgium, Holland and Germany. Due to high levels of competition from Dover and the Channel Tunnel to the French channel ports it is unlikely that Ramsgate will attract a large passenger service on these routes. However, it is estimated that the port has a capacity to handle 5m passengers per year based on the current port land availability.
The initial costs of attracting the first passenger operator are very high as any service in years one and two would have a small passenger throughput and high operating costs.
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Indications are that to meet port costs and ferry operation expenses a minimum of 350,000 passengers per year is required to break even.
This initial cost can be reduced by operating a joint freight and passenger service and adjusting operating times to retain freight capacity at busy times of the day in addition to reducing crew and shore operational expenditure. It is apparent that to attract an initial passenger carrier the ports on both sides of the route must be willing to stand a financial loss at least into year three of the service. This loss can be offset against freight and conservancy income and may include a package comprising of the following:
i) Discounts on the publish tariff based on breakeven throughput and sliding scales
ii) Provision of free or reduces cost accommodation in the port.
iii) Financial and staffing assistance with marketing the line.
iv) Provision of passenger transport between the port and railway/coach routes.
The International Marine Organisation (IMO) member states ratified an agreement that port and ship operators should provide a minimum level of security, based on their trading areas. This agreement is expected to be implemented by July 2004 and will force channel ports to provide a form of AMSA as currently operated in UK ports. Currently UK port changes for passenger operations are considerably higher than those levied in continental ports due to the AMSA requirements enforced by the UK Government through the TRANSEC agency. It is possible that the introduction of the IMO security requirements will increase the passenger ticket charges resulting in a slowing down of passenger growth on channel routes. The effect of this would be to delay the introduction of new passenger services until stability is reached in 2006/7 (this estimate is based on the recovery time taken after the loss of duty free allowances).
6.3.3 Aggregate Operations:
The potential for growth in the existing aggregate operations beyond 200,000 tonnes per year is limited by berthing capacity. Aggregate is a low value cargo and not one that can support alone a major berth development. It is apparent that from 2010 onwards the levels of aggregate being extracted from United Kingdom quarries will have significantly reduced and reliance will be placed on recycled materials, granite from the large French quarries and sea extracted materials.
Should an aggregate operation become a major diversified trade into Ramsgate New Port, it is necessary to construct a berth to accommodate vessels up to 150 metres in length with a loaded draft of 6.5 to 7 metres and to provide storage for up to 20,000 tonnes of material. To achieve this the berth facility would have to be linked to
ro-ro, grain and oil import trades, the ro-ro and oil being high value cargo’s, which would assist in supporting the aggregate and grain.
Ramsgate has one disadvantage in developing its aggregate imports this being the lack of a railhead link. It is interesting to note that Folkestone is being considered as a bulk cargo port in the future, due to the direct rail link to the Port. Ramsgate New Port could only compete with ports that have direct rail links by reducing port charges to compensate the shipper for his additional road haulage costs.
The current three year rolling agreement with Brett Aggregate Limited provides for a guaranteed payment equal to 50,000 tonnes per year, this takes into account annual RPI increase.
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6.3.4 Oil Terminal:
London Manston airport, in the view of both KCC and TDC, has significant potential as both a freight and passenger airport attracting low cost airlines. Unfortunately the SERA report had little interest in Manston as a major player in the future, however, with the potential of the Cliffe Airport proposal taking many years to be completed, if at all, the government may further review the potential of Manston airport.
One of the major disadvantages of Manston airport is its lack on connection to the national aviation fuel pipeline system. To allow the airport to take advantage of low cost airline routes and increased freight operations it is essential that large supplies of fuel are available at an economic price. To achieve this it would be necessary to supply the airport by sea from the Rotterdam market, this can only be achieved through Ramsgate New Port, initially through a tank farm located at the port and linked via a road bridge and later via a direct pipeline.
The port facility should initially be able to handle vessels up to 5,000 tonnes with a storage capacity on site of 6,000 tonnes. As the airport grows there will be a demand to accommodate larger vessels of up to 20,000 tonnes and 8 metre draft. This would allow the supply of fuel both to meet demand and to achieve cost savings for airport customers by reducing shipping costs and purchasing on the futures market.
An installation of this magnitude would require significant capital investment and long term agreements between the airport and port operators.
6.3.5 Land Potential:
In assessing the development potential of any port, the availability of good serviced land is essential, however, land with a waterside aspect has considerable value for development. It is often difficult to make a valid judgement between long term income generation from using land for port activities and short term capital injection from the sale of land. The projections for Ramsgate New Port, set out in this study, make no allowance for any land within the 32 acres making up the port being used for other than port development. However, through the Ramsgate renaissance study it is inevitable that some land in the future will be given over to non-port development and this can only be compensated for in the following options:
a) To reduce the unaccompanied freight capacity of the Port.
b) To restrict diversification into other operations other than ro-ro.
c) To decide not to have passenger operations and concentrate on freight.
d) To enter into an inland port concept involving double handling. 7. Port Structures and Challenges:
7.1 Financial Structures:
There are three types of ports in the United Kingdom as follows:
7.1.1 Trust Ports:
These ports are operated as trusts by Secretary of State for Transport with a Board of local experienced persons. The trust can make a profit; however, can only invest funds on projects and purchases related to the port operations. They have the power to borrow money on the open market to fund port related development, examples of large trust ports are Dover, Harwich and the Port of London.
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7.1.2 Private Ports:
These are private limited companies that have no financial restrictions placed upon them, except those imposed by their shareholders. Examples or private ports are Felixstowe, Sheerness and Southampton.
7.1.3 Municipal Ports:
These are ports owned and operated by Municipal Authorities and are restricted under the local government act in any investments they may make. Examples of municipal ports are Portsmouth, Ramsgate, Sunderland and Workington. Currently municipal ports do not enjoy the right to borrow on the open market to fund capital projects unlike municipal airports, which have special dispensations from the Secretary of State to borrow. Currently one of the advantages municipal ports have over trust and private ports is that they are exempt from corporation tax. Portsmouth, a very successful municipal port, would pay a significant sum in taxation should Portsmouth City Council wish to convert the port to private or trust status.
Ramsgate New Port:
It is apparent that the port, since passing into the operational control of Thanet District Council in November 1998, has relied heavily on obtaining supplementary credit approval (SCA) to fund major maintenance projects to the value of £844,000 for the period 1998/2002. The government has stated that 2003 will be the last round of SCA’s and in future councils will be able to enter into prudential borrowing. At this time, the government has not specified the criteria for councils to entering into prudential borrowing and thus the effect on municipal ports has yet to be evaluated.
It is clear that, should the council wish to develop the port and undertake some or all of the projected developments to meet future demands they would not, without a major change in borrowing restrictions, be able to raise the funding.
The only option open to the council, in raising large sums of money, would be to sell assets and gain approval to use the funding or to enter into a partnership with a port customer.
Unfortunately, with the current financial restrictions placed on municipal ports, Ramsgate New Port is not operating under a level playing field with its competitors of Dover and Sheerness.
7.2 Management Challenges:
There are some management challenges placed on municipal ports compared with their competitor trust and private operators. It should be noted that since the Ports Act of 1989 most of the major ports within England and Wales have passed from trust into the private sector. This transformation of ownership has mainly been attributed to the fact that these large ports have a considerable land portfolio. When operated under a trust structure these ports were unable to fund development that was not port related and diversify into activities away from their core business.
It is interesting to note that most municipal ports are quite small with turnovers below £1m per year and do not own large areas of land, thus the privatisation route is not as attractive. In addition, councils are controlled by strict local government controls; however, the most recent municipal port privatisation is that of Bristol in 1990.
The main management restrictions placed on municipal ports are associated with the following:
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7.2.1 Local Government Structure:
By the very nature of local government structure, it is not possible to look upon a port operation as a pure business venture. Trust and private ports have historically had limited contact with there local councils.
These ports, have as a result of their enabling act, had the right to develop within their own jurisdiction without seeking local planning consent. This has in some cases caused considerable friction between the local authorities and the port authorities and resulted in mistrust.
Municipal ports are, by the nature, of their enabling acts a stand alone authority within the district or unitary authority to which they belong. Ramsgate Port Authority operates under the Ramsgate Corporation Act 1934, which permits the right to develop the port and to operate as a port authority. There is no other operation of the council that has its own individual enabling act.
A municipal port, by its ownership, is very conscious of its position within the community both from an economic development role and providing a service to the community. Private and trust ports do not have this sense of responsibility to the local community and are driven by business efficiency and customers needs.
Ramsgate New Port is well placed to play a major role in the regeneration of Thanet, as the third largest sea port in Kent, can contribute significantly to the employment, tourism attraction and economy of the area. However, to achieve port development growth the council may be faced with many business decisions, which will at times, be in conflict with policy.
7.2.2 Financial Controls:
Currently municipal ports do not enjoy the financial freedom available to private and trust ports allowing them to fund major development projects through borrowing on the open market. Municipal ports are only able to fund port projects through using their capital reveres or entering into partnerships with port users.
The current advantages for municipal ports are that they are not subject to corporation tax, however, this may change in the future.
Central government has reinstated supplementary credit approval from 2000 for major safety maintenance projects to assist municipal ports. Ramsgate New Port has had significant benefits from SCA’s, which has allowed projects such as berth refurbishment work, repairs to surface water drainage, berth lighting upgrades, berth fendering refurbishments, revetment repairs and breakwater emergency maintenance to be undertaken.
The government is intending to release the financial restraints placed on municipal authority borrowing in 2004/5 by the introduction prudential borrowing, at this time it is unsure if ports within public ownership will be allowed to borrow based on attracting new business.
Should TDC be allowed to borrow to develop its port operations based on attracting new and developing existing business, this will place the port on a level footing with both private and trust ports.
A good example of government relaxing public borrowing rules can be seen in municipal airports, which for over three decades have been permitted to borrow on the open market outside treasury rules. This has allowed these provincial airports to grow and benefit the community.
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7.2.3 Human Resources:
Ports by there very nature of operation have relied on a highly train flexible work force. A very high standard of health and safety awareness is required in the hostile environment of port activities. The industry has the second worst accident rate in the country, mainly because it has a high rate of fatalities. The government and the health and safety executive have recognised that ports are dangerous environments and introduced legislation such as the Dangerous Substances in Harbour Areas Regulations, the Docks Regulations under the Health and Safety at Work Act.
One of the major disadvantages placed on municipal ports in the past has been restrictive working practices and the inability to adjust to changes within the port operations.
Ramsgate New Port is very fortunate in not having a large work force and relying on operators to supply their own stevedoring also such services as cleaning and security being supplied by contractors. The port also has a well-established health and safety policy, which is recognised by the Health and Safety Executive.
7.2.3 Vision:
To enable the port to develop and be successful in the future it is required to be innovative, forward thinking, efficient and able to respond to changes in the market place.
This study is covering the period 2002 to 2017 and in some areas 15 years may be seen as a considerable time scale, however, in the ports industry this is in fact quite short. Ports can not stand alone in the overall transport network, they must consider road, rail and to a lesser extent air transport links.
Ramsgate New Port is well placed to develop its ro-ro traffic trading base and has significant land and berth capacity to develop within its current area of jurisdiction.
7.2.4 Long Term Structure Planning:
Dover Harbour Board are currently in the process of commissioning a 25 year master plan into their entire operation. This is a major piece of work and will include all stakeholders in the port, indicating the ports commitment to the future.
The perception of both customers and the local community is very important to any port, as it must have the backing of all to survive in a competitive market.
Ramsgate New Port is a comparatively new business, only being founded in late 1998 and has concentrated on developing the Transeuropa Shipping Line service between Ramsgate and Ostend. The future strategy must be to attract another freight operator and to establish a passenger service.
To send out the right signals to any new potential customer it is essential that the port has a long tern strategy plan and demonstrates it has the confidence to develop the port to meet customer's future demands.
7.2.5 Public Expectations:
The electorate of Thanet has little perception of how successful Ramsgate New Port has become in regaining the freight business lost when Sally Line ceased trading. The local community perception of Ramsgate New Port is that it is not successful as there is no passenger service.
This perception of the port is not just local but is also within the marine industry as the current operator Transeuropa Shipping Lines are considered insignificant in the ferries industry.
The reintroduction of a passenger service will have a significant effect on the ports public image and may open future doors to port growth and financial support.
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Currently the exterior of the passenger terminal is looking neglected and sends the wrong message to any potential new customers and the public. This could be easily rectified by a small capital investment in paint and labour. 8.0 Port Management:
The Council may wish to consider a number of options in respect of the future management of the port. The operations of a commercial port and port authority do not always fit into the concept of a municipal authority. It is the intentions of the Department of Transport to undertake a review of municipal ports in a similar form as that carried out in 2000 of trust ports. The main areas that will be considered in any review will be as follows:
- Port accountability.
- How the port exercises its statutory functions.
- The potential of the port and the planning process in meeting that potential.
- Viability of the port to meet trading requirements.
- Role of the port in the community.
- Consultation with stakeholders.
- Port management structure.
Ramsgate New Port is a business with a current turnover of £1.8m and the potential to have a turnover of £20/30m by 2017 or earlier. Of the 26 municipal ports in England and Wales, Ramsgate is the second largest when compared to Portsmouth with a turnover of £20m, Sunderland and Workington with turnovers of £1m each.
8.1 Retain the Port in the Council’s Management:
Advantages:
- The Council has total control of the port.
- Any surplus port income can be passed back to the community.
- The port’s future operations will fit in with the council’s community strategy.
- The council can change direction on how the port is used at any time i.e. develop port land, etc.
Disadvantages:
- Failure of the port could place a large financial strain on the council.
- Difficulties in obtaining funding for port expansion.
- Considerable statutory responsibilities.
Should the council wish to retain Ramsgate New Port under its own ownership and management there are a number of options available as follows:
Option One
To maintain full management by council employees (current position)
Option Two
To employ a management company to operate the port.
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Option Three
To enter into a partnership with another port.
8.2 Lease or Sell the Port to a Private Operator:
If this option is taken the statutory functions as a port authority would remain with the council, this would include, dredging, navigational aids, Port Control and Pilotage. Conservancy dues that may be used as a lever by the new tenant or purchaser to reduce the port costs can only obtain the cost of maintaining these functions.
Advantages:
- The Council would receive a guaranteed income from a lease or a lump sum from a sale.
- The only borrowing restrictions placed on the port would be related to the financial viability of the business.
- Some of the land based statutory responsibilities would placed on the operator not the council.
Disadvantages :
- The council will have little control over the port.
- Any surplus port income will not come to the council unless a turnover rental agreement is in place.
- The ports future operations may not fit in with the council’s community strategy.
- The council may be placed in a similar situation as 1998 when Sally Line handed the port back if the business failed or the port could become derelict if the owner ceased trading.
8.3 Joint Venture Partnership:
This would involve setting up a company to operate the port in partnership with a ship owner, venture capital company or another port operator. Under the current local government financial rules, it would not be possible for the council to hold more than a 25% share holding in this company.
Advantages:
- The council would receive a share of any surplus income as a percentage of it’s share holding.
- The only borrowing restrictions placed on the port would be related to the financial viability of the business.
- The council will retain some control of the port.
Disadvantages:
- The council will not have total control over the port.
- The only income the council will receive will be related to its share holding in the joint venture company.
- The council would have a liability should the ports business fail.
- Considerable statutory responsibilities would remain with the council as a partner in the company.
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8.4 Other options:
Other municipal ports have looked at options to manage their port facilities, notably the port of Bristol that was sold by Bristol City Council, and the Port of Workington that was taken over from British Steel by Cumbria Council.
Most council's site the following reason for retaining control of their ports:
1. Retention of a major asset
2. Opportunity to control the ports operations.
3. Opportunity to benefit from the ports financial income.
A further options available to the council is to establish an at arms length company to operate the port, however, currently this would be subject to the local government financial restrictions and would require further investigation. 9. The Way Forward:
9.1 Short Term 0-5 Years:
Current traffic projects have indicated that there will be an overcapacity in the channel ports for the next ten years. With the commissioning of a further two ro-ro berths at Dover and the development of Thamesport this increases the competition for new business. Ramsgate New Port has a number of important advantages over its competitors as set out in this documents, the main one being the available of hard standing and berthing slots.
Currently the port relies heavily on one operator to sustain its business, the loyalty of this operator to retain his business at Ramsgate is not known. The operator considers the council is desperate to retain his business and thus has a major advantage in keeping port charges low. This has the effect of restricting investment in the port to essential and safety works only.
Priority should be given to the following areas:
9.1.1 Confirm the council’s long term strategy for port operations.
9.1.2 Stabilise relationship with Transeuropa Shipping.
9.1.3 Establish the priorities of land usage in line with the Ramsgate renaissance implementation strategy.
9.1.4 Establish a second operator in the port.
9.1.5 Establish a passenger service.
9.2 Medium Term 5-10 years:
It is projected that by year ten, the growth in ro-ro traffic will have exceeded available channel port resources and Ramsgate New Port will be at full capacity. At this stage, it will be necessary to develop the port further as set out in section 6.3 of this study.
It is also anticipated that the demand placed on the Port for the import of aviator sprit due to the expansion of Manston Airport will result in the necessity to construct a dedicated tanker berthing facility.
In addition, the quarrying of road stone in the UK will have reduced to a sufficient level that aggregate imports from the large French quarries and sea washed materials will be imported into south east ports in larger quantities. This will result in the current Ramgate import facility being extended to meet demand.
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9.3 Long Term 10-15 years:
It is expected that by this stage the Port of Ramsgate will be well established as both a freight and passenger facility and playing a major role in the economy of Thanet. To meet demand the port must be able to accommodate vessels up to 200 meters in length with a draft in excess of 7 meters at all states of the tide. It is expected that there will be some diversified trade through an alongside berthing facility along the southern breakwater. However, it is still expected that ro-ro traffic will remain the ports core business into the foreseeable future.
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