Ports Policy Review Consultation Maritime Transport Division Department of Transport Leeson Lane Dublin 2. By

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1 Ports Policy Review Consultation Maritime Transport Division Department of Transport Leeson Lane Dublin 2 By portspolicyreview@transport.ie October 29, 2010 Re: Ports Policy Review Dear Sir/Madam Bremore Ireland Port Ltd. hereby makes a pre-draft submission on the Department of Transport Ports Policy Review. In making this submission, due regard has been had to the Consultation Document prepared by the Department. Bremore Ireland Port comprises the construction on a phased basis of an entirely new integrated multi-modal deepwater port to cater for up to 50 million tonnes of annual freight traffic. The proposed new port will cater for load-on/load off (Lo-Lo), Rollon/Roll-off (Ro-Ro), bulk and passenger traffic. The new port will have the deepest shipping berths on the east coast of Ireland and will therefore be suitable to accommodate the increasing demands for new generation deeper drafted freight ships. The new port will have 24 hour marine access with facilities to accommodate and develop new short sea shipping services to the United Kingdom, Europe, Scandinavia and the Baltic states. Vehicular access to the new port will be via a new link road from the M1 motorway with the rail access via a new rail spur directly from the Dublin Belfast mainline. Bremore Port will be designed and operated to the highest environmental standards and respect for the local community. A diverse associated business and logistics district will be created around the port bringing wide ranging economic and social benefits to the Bremore, Balbriggan, Drogheda and East Meath area. Address: Harbourville, Mornington Road, Drogheda, Co. Meath, Ireland Telephone: Facsimile: International code: maritimehouse@droghedaport.ie Registered office: Harbourville, Mornington Road, Drogheda, Ireland. Registered in Dublin with limited Liability No: Directors: P. Fleming P.Traynor

2 Introduction It is acknowledged that current port policy has significantly strengthened the role of ports over the past 5 years and has played a key role in influencing the development direction of Irish ports and the policy framework surrounding this development. However it is hereby put forward that further significant steps need to be taken in order for Irish ports to be responsive to changes in the international market and cater for the long term development of the Irish economy in a sustainable manner. Port development in North Europe has in recent years, focused on facilitating the fundamental changes required by the unitized market. Larger vessels requiring deeper water, longer continuous quays, larger cranes and much improved efficiencies. In this respect Ireland has a 19 th Century maritime infrastructure struggling to support the development of a 21 st Century economy. The basic tenets of port development in this environment are to create high-performance, flexible, safe, efficient, environmentally-friendly facilities, capable of handling vessels 24hrs a day without any restrictions. Modern terminals must be future-proofed for a 30 year horizon as far as possible. It is interesting to note that Ireland is ranked 25 in the Global Competitiveness Index , while the quality of its existing port infrastructure is ranked a lowly 53, far behind countries like Estonia and Lithuania. The following issues are raised in this respect: 1. Economic Importance of Port Infrastructure 2. The continuing trend toward larger ships requiring deep-water ports, and the reduced availability of ships to serve smaller ports 3. The emergence of the concept of port-centric logistics as a key driver for future port development 4. Planning for Ports Planning Framework 5. Facilitating next generation renewable energy requirements 6. Facilitating Foreign Direct Investment (FDI) 7. How could the development of a port master-planning process be facilitated in Ireland? What benefits would arise from the introduction of such a process? 8. How can ports contribute to the delivery of the Smarter Travel agenda? 9. Combating climate change 10. Meeting economic growth needs available capacity at Ireland s Ports

3 1. Economic Importance of Port Infrastructure The importance of international trade to the Irish economy cannot be overstated and it is generally accepted that the export sector has been a driving force in Ireland s recent economic development. The rapid economic growth of the past decade to 2008 has resulted in considerable growth in traffic through Ireland s ports which are estimated to handle some 99% by volume of all trade to and from Ireland. Consequently ports play a pivotal role in the Irish economy and are a key determinant of national competitiveness - inefficiencies in nodes (ports, airports, etc.) and links (ferries and other transport services) in the transport chain can have considerable knock-on effects on the economy. Ports policy is required to address the planning and delivery of port capacity in the mid to long term in order to ensure Ireland s continued external competitiveness. This submission concurs with the Consultation Document that on going investment in port infrastructure is also important to improve services, avail of technology advances and provide more modern facilities to accommodate larger ships. It is critical that the Department deliver on the importance of improving port infrastructure such that Ireland can offer the most modern and efficient port facilities. This is further expanded on in the issues raised below. 2. The continuing trend toward larger ships requiring deep-water ports, and the reduced availability of ships to serve smaller ports The changing requirements of the shipping industry in particular is the key driver affecting the development of ports internationally, a factor that Ireland must also recognise and adapt to if the economy is going to remain internationally competitive. The primary driving force is the rapidly increasing size of ships, and the resultant implications for port navigational water depth, quay length, and cargo handling equipment in particular. Ships are rapidly increasing in size. International shipping companies have been instrumental in driving forward changes in port dimensions and configuration to enable them to accommodate larger container ships and ultimately reduce unit transport costs. Shipping companies are also favouring ports which offer the ability to accommodate a range of ship sizes, hence providing them with flexibility with regards to shipping routes. The length of continuous quay is therefore a significant factor in enabling ports to accommodate ships of increasing size. In addition, larger cranes with a greater reach are needed to unload and load the cargo and transfer it to the quay. In 2004, 70% of all container ships were capable of carrying in excess of 1,000 TEUs, carrying 92% of all container traffic. In early 2009, there were 25 ships in the world with capacities in excess of 10,500 TEUS. By 2013 this is forecast to increase to over 200 ships. In contrast, the average ship entering Dublin Port is 800 TEUs. The largest ships currently calling at Felixstowe Port in the UK can carry 14,000 TEUs.

4 The increase in international ship sizes used for deep sea container trade will have a cascade effect on regional and feeder ports such as in Ireland, as reported by Portek 1. Feeder ports currently receiving ships of 600 1,200 TEU will need to adapt to handle ships of up to 2,500 TEUs, as larger ships are being pushed down the hierarchy and smaller vessels are no longer economically viable. Regional and feeder ports will need to accommodate ships drafts of 10m to 15m, together with turning space for 200m to 300m vessels. Newer larger ships of 15,200 TEUs are coming into operation for deep sea trade. As a result of this ships of up to 5,000 TEUs are now being used on some European feeder shipping routes. South Korean shipbuilder STX recently announced plans to construct a container ship capable of carrying 22,000 TEUs. Ship size has a clear consequence for ports and the ability to provide the water depth required. In order to accommodate the increased size of ship which will ultimately be required to service the Irish market constant water depth of at least 11 metres will be a necessary condition. Advice to Bremore Ireland Port from Ocean Shipping Consultants Ltd is that the focus of investment in the world s shipping fleet since 1990 has been in mid to large sized vessels, with very limited development of the fleet of vessels with capacities of less than 1,000 TEUs. The implications is that markets lacking deepwater port capacity will be increasingly reliant on older and less efficient vessels, and as such increasing transport costs for markets where such a reliance is enforced. Research presented at the IPA 2009 conference by consultant Peter Iles shows that the cost per tonne of bulk cargo carried by a 6,000 dwt vessel is only 0.8 compared to a cost per tonne of 1.27 for a 3,000 dwt vessel. This substantiates the outcome being seen in the market with shipping lines seeking cost efficiencies through use of increasingly larger vessels. Many of Irelands east coast ports have access and tidal issues and cannot facilitate current or future vessels with a 24 hour access The vast majority of Ireland s unitised exports and imports are transshipped in relatively small consignments (small vessels) over a multitude of continental ports. Accordingly Ireland s imports are more expensive and its exports less competitive due to its longer supply chains. Key customer perspectives in the supply chain: 1. Reduce transportation intensity (add value to goods before movement) Attract modern distribution facilities to the immediate port hinterland Utilise the full maritime load potential of each unit Load and Empty units close to the Port inviting added-value process 1 Tomorrow s world (the cascade effect), Portek, Port Strategy, May 2008

5 Such strategies are evident in the redevelopment of Dublin Airport. 2. Compete to reduce costs Modern terminal developments with future capacity options offer the supply chain a realistic method of consolidating traffics over one entry/load port. Infrastructure development allows Ireland to compete to reduce the length of its supply chain with larger more economic vessels making more efficient port calls. Bremore Ireland Port will be developed to respond to customer needs and the market changes driving deep water port facilities. It is put forward that current ports policy is required to address these changing market and customer requirements to facilitate responsive port development. 3. The emergence of the concept of port-centric logistics as a key driver for future port development The review of national ports policy seeks to explore the emergence of the concept of portcentric logistics as a key driver for future port development. There is a very strong case for locating national distribution centres (NDC) and other operations at or near ports. Increasingly, modern ports are developing port centric distribution and manufacturing centres adjacent to ports to meet the wider needs of their customers. Good distribution links can greatly reduce road transport costs, relieving road congestion, and simultaneously improving the speed to market of key product lines. As the proportion of goods consumed in Ireland grows that are sourced from overseas (imports) versus domestically produced goods, the optimum location for distribution centres may shift towards the coast. The increasing use of NDCs to consolidate goods can increase the distance that goods move between supplier and receiver which is not necessarily the most sustainable solution. As ports already provide the transport hub function for switching between modes: sea to rail, sea to road and vice versa, then port centric strategies can potentially offer lower cost and environmentally sustainable locations for distribution centres. The planning system may militate against port centric development if the benefits of colocation of port terminals and warehousing or distribution centres is not fully understood by government and the planning authorities. The planning system needs to be informed of the public interest advantages of port centric location. A port centric solution offers the opportunity for ports to reclaim their traditional distribution roles and offer more sustainable transport options for freight for the future.

6 Some advantages of port centric distribution centres are: Can eradicate the need to transport goods to an inland import centre for further onward distribution. Goods can be cross-docked (transferred from container to road transport) at the port for direct store delivery; Reduces road mileage, cutting fuel use, hence resulting in cost savings and environmental benefits, i.e. the reduction in the carbon footprint of goods; Avoids the cost and time delays in the return of empty containers back to the port for reloading, therefore the faster repositioning of empty containers; Avoids the issue of landside weight restrictions on imported containers, hence allowing containers to be filled to capacity; Reduces transit times, hence tangible benefits to the distribution of perishable and fashionable goods; Lower end to end unit logistics costs; Opportunity for port operators to diversify, and support the financial viability of core port operations; and Accommodate value added services within the port, such as bonded warehouses. A port centric supply chain hub and distribution centre will encompass a wide range of industries including container processing (e.g. stuffing and unstuffing, repairs), medium term storage facilities, manufacturing, end user warehousing, business parks, R&D, retail (e.g internet retailing distribution). Retailers in particular will take a long term view and exploit the benefits from containerisation, deepwater shipping, and port based distribution centres. Examples of successful and developing port centric supply chain hubs are: Asda-Walmart and Tesco distribution centres at Teesport in the UK; Sainsbury / BAP Group at Felixstowe; NYK Logistics at Thamesport; HKG, Singapore and Busan developing facilities for value adding activities to respond to competition from ports such as Shanghai and Shenzhen; and London Gateway Port - will combine with Europe s largest logistics park, offering 9.5 million square feet for distribution, manufacturing and high-tech sectors.

7 As outlined below in relation to the planning framework for ports, it is critical that port centric activities be facilitated at Irish ports right through ports policy and planning legislation if many of the transport issues of ports are to be resolved environmental impacts, time constraints, congestion, unnecessary double and triple tripping in delivery of goods. 4. Planning for Ports Planning Framework It is put forward here that the planning framework which deals with ports has not sufficiently caught up with the changing role of ports in the development of the national economy, nor with the changing profile of ports as clean, environmentally friendly, community oriented drivers of the local, regional and national economy. Current planning framework / legislation for ports: Strategic Infrastructure Development (SID) Local Authority Development Plans Regional Guidelines National Spatial Strategy Issues: Flexibility for future port land development to respond to economic growth and changing port requirements Need to respond to the growing importance of port-centric activities which serve to integrate logistics with port activities resulting in efficiencies in time, cost, environmental impact, speed to market and promotes the concept of Smarter Travel Ability to respond to emerging markets such as that identified in the Ports Policy consultation document in relation to new renewable energy markets, particularly those in the marine sector such as off-shore wind developments. The definition of Port under the Seventh Schedule for SID, as revised (Planning & Development Amendment Act 2010, Section 78 (b)), does not address the landside needs of ports and the changing nature of those needs, nor does it provide the flexibility to respond to new market sectors. SID does not effectively provide the basis for the introduction of a master planning process addressed in the Ports Policy Consultation document and addressed elsewhere in this submission. In fact, it is strongly considered that current SID legislation seeks to limit the proper functioning and sustainable development of ports within the economy, quite differently to how it treats airports and their requirements.

8 It is put forward that this is a function of an issue identified in the Ports Policy Consultation document whereby the nature and needs of ports are not fully understood either by the public nor by governing bodies. The onus is squarely on the Department to influence and inform other Government policies and decisions at all levels of the decision making process of the critical nature of continued and proper port development to the economic development of the country. Restricting port operations should not be a feature of planning policy but instead this policy should serve to foster port development in the interests of this island economy. It is equally put forward here that there is a difficulty at plan making level to specifically include for port development potential without exhaustive environmental assessment being undertaken. This is impractical at the regional level with the result that Regional Planning Guidelines effectively discount port programmes ignoring the significant positive impacts such programmes will have economically, socially, environmentally, and in infrastructure terms. The amendments to the Planning & Development Act introduced in 2010 have missed the opportunity to confront the particular role of ports and the requirement to deal with them effectively and efficiently in planning terms. It is therefore put forward that revisions to Port Policy should give guidance to planning authorities as to the particular requirements of ports, and should further the discussion in relation to amending planning legislation to provide the flexibility required for port development. The question has to be asked why try to define a Port when it is a multifunctional evolving organism with life spans longer than most simple development forms that must respond to economic growth requirements over the long term? Current planning policy seeks to restrict rather than promote port development, such that the economy, the community and the consumer all lose out. 5. Facilitating next generation renewable energy requirements Developing ports capable of serving Irelands growing offshore wind industry are essential to its further development. The technical requirements for ports for offshore wind construction are not too industry-specific however the most common reasons for ports to be ruled out of use for offshore wind construction are: Insufficient land area. Insufficient vessel access and deep water facilities. While Ireland has planned for the development of offshore windfarms it may miss the opportunity to create the jobs associated with the production of the windfarm units.

9 A number of Continental European ports are competing to win construction contracts for offshore wind projects in UK waters and in response to this move the UK Department of Energy and Climate Change (DECC) has allocated 60 million for investment in the country s ports to support offshore wind manufacturing, establishing a UK wind ports index. Currently Ireland has not been successful in securing a manufacturing base and could lose out to the UK west coast wind ports. Ports policy should directly address this growing market sector as a valuable addition to port revenue generation and the Irish economy. In terms of planning for this type of development, SID legislation should be revised to incorporate the potential of ports to facilitate manufacturing and servicing of marine renewable energies to foster a new economic sector in Ireland through our ports. 6. Facilitating Foreign Direct Investment (FDI) Flexibility in land-side and sea-side use at ports is required to facilitate FDI into Ireland. This can be achieved through a revised planning legislative framework as outlined earlier. There is evidence to suggest that companies, who are considering undertaking FDI as part of their consideration of suitable locations, identify if a deep water port close to the major centres of population is available in countries that they are targeting. There are indications that Ireland has not been considered in the final stages of some FDI opportunities because we do not have such a port. The development of Bremore would address this situation. 7. How could the development of a port master-planning process be facilitated in Ireland? What benefits would arise from the introduction of such a process? The development of a port master-planning process should be facilitated in Ireland very much following the UK model. The imperative for a process of this type to be formally acknowledged in the Department and at Government level highlights the strategic nature of ports and the criticality of providing sufficient, well located, well planned planning framework and supporting infrastructure for the future build out potential of ports such that they can respond to growing economic activity in the national economy.

10 Equally it is put forward that such a process should directly address the very real requirements of environmental legislation and how this can be addressed in the master planning process. This is to achieve the required level of public consultation and environmental assessment during the master planning stage such that future development of the port is framed correctly and provided with the appropriate longevity required for port build-out and future capacity requirements. 8. How can ports contribute to the delivery of the Smarter Travel agenda? Through the delivery of port centric activities in the port sector and this needs to be brought through in future Ports Policy to inform the governmental agenda at all levels including transportation, environment, and port development. The Department of Transport has a critical role to play in the coordination of land side transportation infrastructure to provide a reliable and sustainable hinterland connections as part of an integrated transport chain as the Consultation Document reference to the European Commission s Communication on a European Ports Policy. This needs to be coordinated through regional and local development plan policy and the Department is required to be proactive in this respect with the outcome of this new ports policy document. 9. Combating Climate Change Planning for climate change: Are ports planning for climate change? Sea levels are rising much faster than expected and it is clear that serious climate issues lie ahead. Port policy should seek to examine the issue and establish the preparedness of our port industry for climate change and examine what are the implications for ports and the economy. Port centric Development: Combating climate change is one of the port sector s biggest environmental challenges. Ports are increasingly at the centre of climate change initiatives. Facilitating the port centric agenda will ensure that goods are handled in the most effective way, saving many road miles and costs. This port centric principle of logistics design has considerable economies in time, cost and carbon emissions. Deepwater facilities Larger vessels: Ports with true deepwater capability can considerably reduce the carbon footprint of each seaborne container. Studies have indicated that improving port efficiencies through increased scale and larger vessels represents the future for ports in terms of sustainability and reduced greenhouse gas emissions.

11 10. Meeting economic growth needs available capacity at Ireland s Ports Port capacity is increasingly recognised as a fundamental driver of a country s international competitiveness. As an island nation, where over 90% of the goods imported and exported leave or enter by sea, adequate and efficient port capacity is a competitive necessity for Ireland. The current and future supply of port facilities is not limited to the physical size of ports and the volumes of traffic that can be theoretically handled, but also the quality of deepwater access and land access, and also quay length, size and configuration of backup and storage area, facilities and cargo handling equipment, operational management practices, and IT and communication systems, some of which has been outlined earlier. The Irish Government has recognised the likely future capacity shortfall in Irish Ports since the late 1990s and several reports by Baxter Eadie, Fisher Associates, IBEC, and others have confirmed the urgent need for additional port capacity, specifically additional container terminals, in Ireland. Whilst the current economic climate has had an impact on traffic volumes through Irish ports, as well as ports globally, BIP would agree with the conclusion of the Indecon Report (referenced below) that while there is uncertainty on the future rate of growth in demand, this will simply influence the precise timing of when capacity will be required and the not the validity of the conclusion regarding the need for expanded capacity. Fisher Report The Fisher Report 2, which was commissioned by the Department of Transport in 2005, indicates that approximately 59% of the Lo-Lo traffic and 76% of the Ro-Ro traffic of the State is handled at Dublin Port. The report concludes that the future shape of Irish ports sector will be largely determined by the ability of Drogheda Port Company to secure funding for the development of Bremore Port, the availability of Port of Cork to secure funding for the proposed Oysterbank Terminal and the actual rate of growth in Ro-Ro trade. The report recommends that it would be prudent for the Government to intervene to encourage the timely construction of additional Ro-Ro terminals. Since the publication of that report, a planning application under the Strategic Infrastructure Development Act by Port of Cork at Oysterbank, Ringaskiddy, Co. Cork for a port development with a 400,000 TEU per annum capacity has been refused planning permission by An Bord Pleanála, as has the SID application by Dublin Port for extension of its facilities. 2 Evaluation of projects for Ireland s unit load port capacity requirement to 2014 and beyond, Fisher Associates, Department of Transport, November 2005

12 Department of Transport Dublin Port National Development Plan Study (the Indecon Report) The Department of Transport recently published their Strategic Review of Dublin Port and it s Future. The stated purpose of this study was to review the role of Dublin Port and its future taking into account locational considerations, ports policy, ports capacity (on an all island basis), urban development policy, the National Spatial Strategy and national economic policy. The report concluded that nothing should be done at a policy level to block either the proposed expansion of Dublin Port or the proposed development at Bremore at this stage. It also concluded that the development of a new port such as the proposed Bremore, if commercially feasible, would have significant regional and national benefits and is likely to enhance competition in the Irish port sector. It is put forward that ports policy needs to recognise some of the inherent difficulties in delivering port capacity at the scale required to serve Ireland s economic growth needs, and that provisions should be put in place as outlined in this submission to facilitate the development of ports, such as Bremore Port, such that future port capacity is not compromised by development difficulties. Conclusions The key points raised in this submission include: Ports play a pivotal role in the Irish economy and are a key determinant of national competitiveness and inefficiencies in nodes and links can have considerable knock-on effects on the economy. The changing requirements of the shipping industry is the key driver affecting the development of ports internationally and the primary driving force is the rapidly increasing size of ships, and the resultant implications for port navigational water depth, quay length, and cargo handling equipment in particular. The vast majority of Ireland s unitised exports and imports are transhipped in relatively small consignments over a multitude of continental ports. Accordingly Ireland s imports are more expensive and its exports less competitive due to its longer supply chains. Increasingly, modern ports are developing port centric distribution and manufacturing centres adjacent to ports to meet the wider needs of their customers. The planning framework which deals with ports has not sufficiently caught up with the changing role of ports. Ports policy should directly address the growing offshore wind industry as a valuable addition to port revenue generation and the Irish economy. Ports have a role to play in addressing issues of Climate Change.

13 Port capacity is increasingly recognised as a fundamental driver of a country s international competitiveness and ports policy needs to recognise some of the inherent difficulties in delivering port capacity at the scale required to serve Ireland s economic growth needs It is imperative that review of Port Policy in Ireland recognize the changing role and requirements of Port Development as outlined in this submission. Sea ports are of unparalleled critical importance to the Irish economy, trade and competitiveness. However, it is clear that there are well documented predicted future capacity constraints in the Irish ports sector. National planning and development policy advocates the vital importance of ports infrastructure and the need to ensure that there is adequate future capacity and that landside constraints are addressed through the delivery of new infrastructure. The Fisher Report (2006) concluded that the future shape of Irish Ports sector will be largely determined by the ability of Drogheda Port Company to develop Bremore Ireland Port and the rate of growth in unitised trade. Bremore Ireland Port is being progressed as an entirely new world class port for the eastern seaboard of Ireland which will develop on a phased basis to allow for an ultimate capacity throughput of 50 million tonnes of Lo-Lo, Ro-Ro and bulk freight. Bremore Ireland Port will therefore be in a position to secure Irish ports sector capacity in the medium-to-long term. We would request that our submission to this Consultation process be acknowledged by receipt and that we are informed of further developments in the Ports Policy Review process. We sincerely hope that the issues raised here will be seriously considered in the review of Ports Policy, and we would be happy to expand further and work with Department of Transport on any element of this submission. Yours Sincerely Mr. Paul Fleming Director Bremore Ireland Port