Ports Review 2021
The pandemic may have dealt a major blow to tourism, but imports and exports have kept much of the sector buoyant during 2020. And while Brexit is proving problematic there are hopeful signs in renewables and the proposals for new ‘green ports’, writes Anthony Harrington.
WHILE the past year has been a tough one for Scottish ports, the sector can be thankful that apart from the complete cessation of cruise ship activities, most lines of business for the ports have continued to generate revenues. With most ports designated as essential services, a number have been able to hold their own.
Richard Ballantyne, Chief Executive of the British Ports Association points out that the sector has benefitted from the fact that as an island nation, exports and imports have kept going. “While it has been a challenging time, the ports have very much done their bit, so to speak. That has been a positive, but it has meant that the ports have not received anything like the levels of government support that some industries have had.”
He points out that those ports that usually derive much of their revenues from recreation and tourism have had to deal with dramatic decreases in those activities.
“What we are seeing is that the cruise industry is now united in looking at how you can build a safe set of procedures to enable cruising to restart when the time is right. Actually, in certain locations, the Mediterranean for example, cruise lines are following protocols and cruising has successfully restarted,” he says.
The obvious problem for the sector though is that it will be impossible to set itineraries to visit Scottish ports while the country is in lockdown.
“Once we have got infection rates under control and it is safe to start tourism activities the real challenge will be the political climate. The cruise season typically starts in the spring. However, we are unsure when government and policymakers will be willing to let the hospitality sector receive cruises, and whether local people will tolerate an influx of tourists at a time when people are still afraid of the virus,” he notes.
While one has to have some sympathy for those kinds of fears in local communities, the bigger picture is that cruise ship visits provide vital tourist revenues to local areas and can be hugely important to local economies. So when cruising does restart government will have to play a key role in reminding local communities just how central a welcoming attitude is to Scotland’s brand as far as tourism is concerned.
On top of the pandemic, the ports sector has also had to get to grips with all the changes introduced by Britain’s exit from the EU. “The end of the UK-EU transition period has not gone as smoothly as the government will have wanted. However, the pandemic has meant that we are seeing lower levels of trade in many ports. This has probably lessened the negative impact of dealing with Brexit and provides some additional space for people to get to grips with all the changes in procedures and documentation,” Ballantyne comments.
He points out too, that as one of the UK’s leading export regions, Scotland has a slightly different relationship than other parts of Britain, with the rest of Europe. “Though onerous, new customs procedures are perhaps more easily dealt with in Scotland. However, we are seeing the impact of the new border controls at European ports on certain Scottish exports, such as seafoods.
“It is perhaps ironic that the Scottish fishing industry, which lobbied so strenuously for Brexit in order to regain control over quotas, now finds itself caught up in the negative consequences of leaving the EU Customs Union and the Single Market.”
Effectively, around 80% of the fish that is landed in UK ports is exported, mostly to Europe. These exports are now being subject to all the onerous customs and documentation requirements mandated by Brexit.
“This is causing a huge amount of disruption and is taking a lot of the shine off what is a very attractive and productive Scottish industry. Fish prices are now largely at a low level and we are seeing limited landings into certain Scottish ports,” he warns.
Ballantyne has welcomed the change of heart on the part of the Scottish government with respect to the Westminster Government’s plan to establish at freeports around the country. Initially, the Scottish Trade Minister, Ivan McKee was Luke warm towards the UK Government’s freeports idea, claiming that it was incompatible with the Scottish Government’s aim of creating a plethora of high value, high skilled jobs.
However, this led to some negative press for the Scottish government, which was accused of holding an outdated 1960s view of what freeports are capable of being. Now, the Scottish Government has reversed that earlier decision and has said it will introduce its own version, which it is calling ‘green ports’ rather than freeports.
The race to achieve net-zero carbon emissions and subsequent surge in offshore wind, tidal and wave energy generation has a considerable upside for ports
According to McKee, the green ports concept will be superior to the English equivalent because they will be about inclusive growth, fair work practices and will be committed to helping Scotland deliver a net-zero economy.
Businesses inside a green port arrangement, along with the port operators, would have to commit to paying the real living wage, and will have to adopt the Scottish Business Pledge commitment. This commits them to supporting sustainable growth in local communities. “As we understand the concept of Green Ports, they will enable Scottish locations to compete with freeports elsewhere in the UK. But they will have some unique Scottish characteristics, representing the Scottish Government’s values,” Ballantyne says.
“The point we would like to make is that we hope the Scottish move to green ports is more inclusive than the English process and allows more ports and airport regions to be granted special status.”
He points out that it is essential that we get an inclusive policy that does not disadvantage certain regions, as this is essentially a market-led industry that is not accustomed to direct government intervention.
“We do not want to see regional disruptions and disadvantages for businesses as they look to take advantage of favourable tax and tariff regimes, although we do want to see Scotland attract in investment which might have previously gone to European ports he comments.
Ballantyne notes that the ports sector also stands to benefit hugely from the upsurge of interest in renewable power generation. “We are really looking forward to seeing opportunities being developed right across the marine generation scene, from offshore wind to tidal and wave generation,” he comments.
Sector remains barometer of the Scottish economy’s health
WITH ports in Scotland providing a vital ‘land bridge’ link for freight and goods between Ireland, mainland Europe and the rest of the world, Neil Girvan – publisher of the Ports of Scotland Yearbook – says the sector is well equipped to handle the complexities of leaving the EU.
Girvan said: “Scottish ports have been ready for Brexit for some time and continue to keep a keen eye on the delay implications of the various changes. Getting goods in and out as quickly and as safely as possible is key for their Scottish customers.
“However, for port users in the freight industry and many cargo owners, there remains a disconnect between the UK customs and borders rules and the EU requirements resulting in the well published transit delays of many perishable goods.”
Scotland’s wide array of ports range from major dock installations, terminals and wharves to fishing ports, recreational harbours and large-scale marinas – with the pandemic hitting some parts of the industry very hard.
In recent years, however, the growth in the cruise industry has been outstanding. In 2020, a record extended season of over 900 cruise calls were booked for Scottish ports – with the first calls expected by the end of February running right through until October. However, this was virtually all lost – hitting both the ports and the destinations hard.
Girvan believes there will be a need for an element of recovery before the cruise industry is back to full strength.
He said: “The key to the long-term prosperity of the Scottish ports remains in the diversity of their services and the flexibility of their skill base to provide the best solutions for their customers. “And it is this flexibility and diversity that has allowed them to trade through such trying times. They remain in good shape to take advantage of all the traditional opportunities in agriculture, forestry, dry bulks, container business, fishing and leisure industries.”
Girvan says that the role of the port must constantly evolve. He also noted: “Governments are keen to meet higher environmental standards and the Scottish ports sector will have respond.
“The country’s ports have long been looking at ways to be environmentally sustainable. Looking forward, the implementation of the green agenda and how this energy transition plays out will be fascinating – and how Scottish ports will facilitate and service a still vitally important oil, gas and subsea sectors.”
Scottish ports continue to find new ways to accommodate the renewables and marine energy generation industry sectors, including wave and tidal schemes. However, Girvan believes the most immediate renewable opportunities lie within the offshore wind.
He said: “It is well known that UK governments want to increase offshore wind energy substantially. This will require a huge amount of development and much will be facilitated in the Scottish port sector and Scottish waters.
“Some ports are already benefiting from the revenue opportunities associated with the assembly and construction of the offshore devices.
“With many of the established offshore wind farms anchored in Scottish waters the longer-term maintenance and service opportunities brings in much needed income.”
Decommissioning is one of the sectors in oil in gas that has been talked about for many years but has not delivered significant returns for Scottish ports yet.
However, it is coming more to the fore and many believe it will be core business by 2030. And already, many Scottish ports are winning tenders for specific projects related to the cessation of production in the traditional fields of the North Sea.
Girvan said: “Scottish ports continue to punch above their weight. Ports are a long-term infrastructure investment, where the payoff to local communities, and the Scottish economy in general, continues year after year. Investment remains a key driver of growth in our business.
“Scottish ports and harbours have been pouring large amounts of money into improvements and expansion plans – creating engineering opportunities to dismantle the past and build the future.
“Wherever you look, there is ongoing work to replace older structures with modern new buildings whilst upgrading their existing facilities – including deepening harbours, strengthening quaysides, upgrading container handling equipment, replacing cranes and building heavy lift pads.
“The Scottish port industry will remain a barometer of the health of the economy and go on to create supply chain developments for all sizes of businesses.
“The industry is full of opportunities and Scottish ports will continue to provide sustainable employment along with the technical ability, knowledge, and investment to ensure they will play a crucial role as a sector driver in both the national and local economies.”
Published annually since 1979, the PoS YB is Scotland’s premier quality publication focused exclusively on the Scottish Ports sector. Now in its 40th year of publication, it provides a unique and authoritative resource – delivering extensive information, facts and analysis of an economic area that remains key to our prosperity.www.portsofscotland.co.uk
You can view the full 2021 Ports Review here.