Gateways to trade

UK Major Ports Group

Tim Morris, Chief Executive Officer, UKMPG, looks forward with confidence to the future of the UK’s ports

Enjoying a cup of tea or coffee while you’re reading this? You wouldn’t be able to without major UK ports. With around 95% of all goods entering and leaving the UK moved by sea,1 and 75% of that passing through the ports of UK Major Ports Group (UKMPG) members, sea ports are the UK’s predominant gateways with the world. They enable trade and provide each of us with many of our daily needs.

Nearly half of the UK’s food and feed is handled by one of the UK’s largest ports on its way to your home and hand. Almost every screen you look at – TV, phone, tablet – has arrived in the UK via the sea. Our ports are also fundamental for the UK’s strategic manufacturing sectors. Eight out every ten cars made by the UK’s world-beating automotive sector, for example, are exported.

These are just some examples of the fundamental role that ports, and particularly major ports, play in our lives and for the UK economy – an economy to which the ports sector directly contributed £7.6 billion of value in 2015.2

Trade benefits us all

With around 95% of all goods entering and leaving the UK moved by sea, ports are the UK’s predominant gateways to the world

Does it matter that we trade with the world? Yes, it certainly does. International trade has an important, positive impact on economic growth. Trade increases competition and allows the scale required for greater productivity and innovation. Again, the UK’s automotive sector is a case in point. The Treasury recently referenced two weighty academic studies demonstrating the benefits to a national economy from more international trade:3

  • A 1% increase in the trade-to-GDP ratio leads to a 0.17–0.33% improvement in GDP per capita.
  • A 1% improvement in export growth brings a 0.5–0.75% boost to GDP per capita.

So, although of course it’s never as straightforward as economists’ models predict, the evidence does suggest that an economy that trades more is generally one that creates more value.

Realising the potential

Major ports are also key catalysts for investment and jobs in their local regions, regions which can too often suffer from high levels of economic and social hardship.4 This catalytic effect is not just in the ports themselves – where the jobs are 47% more productive than the UK average,5 and often significantly better paid than local averages. It is also in the surrounding hinterlands as ports develop their broader estates and local land for productive use – logistics parks, fulfilment centres and manufacturing facilities. The wider infrastructure development – such as road and rail connectivity – made to support port development can also open up a range of more general economic and business activity for coastal communities. It is claimed that each pound spent on a road scheme connecting a port can add more than four pounds of value for the wider local economy through improving conditions for business and tourism.6

Sustainable benefits

It is of course essential that growth is sustainable, both economically and environmentally. Major ports take environmental stewardship very seriously. They play an important role in sectors such as renewable energy – including as sites for wind and solar energy – as well as being vital parts of the supply chain. They have made good progress on issues such as air quality, and they are developing the next generation of hybrid and fully electric equipment. The task for both business and regulators is to ensure that environmental protection proceeds hand in hand with the economic growth that creates jobs and economic wellbeing.

The Brexit challenge

Much has been written about the risks from Brexit. It’s important to get the facts straight and concentrate concern on the real areas of risk.

The UK’s large ports handle huge volumes of non-EU trade already. In some UKMPG ports, 95% of trade comes from outside the EU Customs Union.

The main ports handling high volumes of self-driven traffic (‘accompanied’ or ‘selfpropelled RoRo’ in the jargon) on very short sailings within the EU are not UKMPG members, but we acknowledge that these ports face a particular concentration of Brexit risk factors. Department for Transport statistics identify 8% of UK port volumes for 2016 as falling into this category.7 Dover is by far the dominant port in this segment, making up 6% of UK port volumes, with a 97% concentration of self-propelled RoRo traffic.

The challenges certainly shouldn’t blind us to the opportunities that Brexit brings. The fact that boosting the UK’s trade with the world is now high on the agenda is great news not just for ports but for many sectors of the UK economy. Some ports are already experiencing customer interest as alternatives to congested routes are put in place. And, given that the UK’s major ports sector is unique in Europe in being privately run and owned, Brexit is an opportunity to create the right pro-investment policy framework for the UK situation.

Port operators have proved time and again that they can adapt successfully to major change – but to do so they need clarity on what changes are needed, pragmatism around the period of change, and safeguards on any negative impacts on investment and competitiveness.

Looking forward with confidence

With Brexit, the UK stands at a transformational point in its history. Trade and ports will be central to the UK reasserting itself as a confident, successful independent nation on the world stage. Through doing so we have the potential to boost investment, jobs and opportunity in our coastal communities as well as in globally trading supply chains throughout the UK.

So what is the three-point plan from the UK’s major ports to supercharge the success of the UK as a global trade player?

  1. Hard-wire ‘trade’ as a priority into government and regulation – for example by establishing a cabinet committee and conducting a ‘trade first’ review of key policy areas.
  2. Make sure we have the right connectivity between the UK’s global gateways and our main centres of economic activity and populations – for example by putting more focus on improving the key ‘freight corridors’ responsible for the majority of trade movement in the UK.
  3. Use the UK’s new flexibility to set a policy and regulatory landscape that’s appropriate for its unique major ports sector – for example by exploring the potential of ‘free ports’ to drive investment and jobs around our coast and by setting environmental standards which remain high but which reflect the specific circumstances of the UK.

Britain is at its best when it is an open, trading nation, and its ports have been foundations of the nation’s economic success and prosperity for hundreds of years. If the UK continues to make trade a national priority, has the courage to grasp the opportunities that Brexit offers and takes an infrastructure-led approach to growth, major ports are confident that they will continue to play this foundation role for centuries to come.

The United Kingdom Major Ports Group (UKMPG) is the trade association representing most of the larger commercial ports in the United Kingdom. It has nine members who, between them, own and operate over 40 ports. For more information, see http://ukmajorports.org.uk

References

  1. Port freight statistics: 2016 final figures (revised). Department for Transport, 2017. www.gov.uk/government/statistics/port-freight-statistics-2016-final-figures.
  2. The economic contribution of the UK ports industry: a report for Maritime UK. Centre for Economics and Business Research (CEBR), September 2017.
  3. The long-term economic impact of EU membership and the alternatives. HM Treasury, 2016.
  4. For example, see Living on the edge: Britain’s coastal communities. TheSocialMarketFoundation, September 2017. www.smf.co.uk/publications/living-edge-britains-coastal-communities.
  5. The economic contribution of the UK ports industry: a report for Maritime UK. CEBR, September 2017.
  6. See for example the Heysham – M6 link road project: https://heyshamlink.lancashire.gov.uk/background.aspx.
  7. Port freight statistics: 2016 final figures (revised). Department for Transport, 2017 (combining Tables 103, 204 and 400).