Port service enhancement stakeholder consultation- Phase 2
[email protected]
15th December, 2012
First of all we like to express our appreciation for the recognition by the European Commission of the key role of ports
in achieving economic growth and job creation. This key role of ports in the European transport system and its pivotal
role in the logistic interfaces, does indeed call for a number of EU actions in certain areas.
We have however chosen not to fill out the questionnaire but instead react via this paper. The wording of the
questions is not always unambiguous, moreover the answers call for an approach by subjective estimation, whereas
an economic analysis would fit better.
Doubtless that it is possible to improve and strengthen the logistics chain in maritime transport, but we do not
believe that improving port services by some of the measures as now proposed should have the priority that it has in
this second consultation round. The high degree of satisfaction for port services that the port customers and
-community expressed in the first consultation round supports this view.
The areas where EU action is needed were more or less defined on 25-26 September 2012; hinterland connections
and infrastructure for inland ports, long term infrastructure plans including environmental legislation, elaborate on
port management as developers, legal certainties to enhance long term public investments, state aid guidance, IT
infrastructure and interconnectivity in logistics etc.
When yet seeking to improve port services, we should not necessarily do so in the competition between parties,
something the 2nd consultation round much focuses on. This paper addresses port services and their role in strong
port systems from a harbour masters’ perspective. A harbour master is generally both the local competent authority
who provides a safe port to all users and drafts and enforces the port bye-laws, and the ship-shore interface that
provides for efficiency and security in port calls. In these capacities he mainly is concerned with and a party to the
nautical-technical services in the port.
In recent years a number of ports have decided to privatize port services delivered previously as public services by
the port and this process is still ongoing. Irrespective of publicly or privately offered there are cases in which more
providers may cause discontinuity and problems that do not weigh up against any benefits that multiple supply in
theory may have. In fact many ports do prefer a situation where a service provider acts as had he a natural
monopoly.
For many ports the relevant market is just too small to allow for more parties to successfully compete, that is to
have sufficient turnover and revenues to allow for continuity, investments and a good service level and 24/7.
In those ports were the relevant market indeed is sufficiently large, we do find dominant or quasi-monopoly positions
that work fully to the satisfaction of the port customers and port community. In these cases parties may have
market power, but do not exercise let alone abuse this market power.
Abuse of market power knows the following main forms:
1.
Excessive pricing
2.
Refusal to supply
3.
Poor quality
4.
No drive for innovations
A supplier of services, however having a dominant position, does not abuse his dominant position if:
1.
Prices are not excessive. Excessive pricing is charging a price which is excessive because the difference
between costs actually incurred and the price actually charged is excessive and these unfair prices are
imposed on customers.
2.
Supply is delivered in an non-discriminatory way, that is to all port users under all circumstances
irrespective of the size of the customer or the degree of difficulty of delivering the service. Undersupply on
the other hand may take the form of refusing or delaying supply to certain, from an economic viewpoint,
‘uninteresting’ customers. Undersupply has the risk of hampering supply chains in ports and therewith the
efficient functioning of a whole port. Undersupply caused by under-capacity can also be observed in a
competition situation, equally hampering logistic chains.
3.
The quality of the delivered services, expressed in terms of safety but also of speed of delivery and
cooperation in the logistics chain, is at a good level.
4.
Innovations are implemented, either by own innovative concepts or by following up innovations within the
industry or adapting to technological or business innovations of their customers.
When these factors are taken care of there is in principle no objection to services being delivered by just one party in
the port. The risk of abuse of a dominant position however is always there and must be addressed. In case of abuse
there is always the national and EU-legislation to oppose this behavior. Furthermore abuse of exercising market
power can be prevented. The threat of potential competition is probably the best remedy against potential abuse.
A dominant position is therefore not be given for a undefined period but should regularly be assessed against pricelevel, quality, supply and innovative power. The possibility of introducing competition in case of assessed
underperformance remains a policy option for the port authority.
The best place to do this assessment are the individual ports. An individual approach is indispensable in order to well
manage a port. The best parties to deliver this assessment are the port customers, port authorities/harbour masters.
Customers because they can assess if a party uses the power to behave independently from their customers. Port
authorities/harbour masters because they are the ones who can supervise and assess vessel calls in the port and the
degree to which certain service providers may hamper this process.
There are many remedies within ports, regardless of the market access regime for port services in place, that
address the above mentioned concerns and mimic the effects of competition. Some of which are:
-
The possibility within ports for a port regulator to regularly review the performance of port service suppliers
and undertake corrective actions.
-
Quality requirements for port service providers to be defined in every port by the port authority/harbour
master in a clear and transparent way.
-
Create an understanding of what common minimum quality requirements for port service providers consist
of. Defining quality levels is a next step. This can best be done by existing organizations such as EHMC or
ENPi. Quality levels are to be agreed upon together with providers of services and monitored by the port
authority/harbour master of individual ports.
-
A regular and formal assessment by the port authority/harbour master and port customers measuring
performance against certain norms. These norms by indication can be European ones indicating certain
bandwidths of operation and price-setting.
-
Addressing the role of the port authority/harbour master in monitoring/steering quality requirements.
-
Supply of services to be agreed upon between providers and the port authorities/harbour master and means
to enforce the agreed supply levels.
-
Where the port manager considers a free market access the best option for a particular service, have means
to regulate this access.
-
Transparency in prices, price setting and the obligations or exemptions from using port services.
Within the 12 proposed measures that are now tested, we believe a number of them may be ‘appropriate’ in respect
of the above:
IV2.1.A. Defining Public Service Obligations on the basis of general legal and economic principles; those should take
the form of guidelines for implementation at local level
IV.5.1.A. Introducing guidelines for establishing transparent, non-discriminatory and proportionate port services
charges
IV.7.1.B. The definition of minimum quality requirements for port service providers at port level; defining a definition
of quality requirements is useful, imposing them not
IV.8.1.A. Entrust the port authority/port manager as the coordinator for port services at port level and clarify its role,
including the enforcement (or monitoring) of minimum quality requirements
IV.8.1.B. Introduce a port users committee in which all the port users are gathered at a strategic level and at regular
intervals (best practice recommendation on a voluntary basis)
European Harbour Masters’ Committee
December 2012
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ENP, European Nautical Platform; the platform intents to improve the cooperation between all nautical parties in ports with
the aim of safe and efficient operations. It does so by sharing nautical topics and best practice, by exchanging knowledge on
nautical operations and eventually agree on common European standards of safe marine operations in port waters and their
approaches. The platform is a cooperation between the European organizations of shipmasters (CESMA), pilots (EMPA), tug
operators (ETA), boatmen (EBA) and harbour masters (EHMC). These nautical experts combine forces to address nautical
safety and performance from pilot station to berth. The ENP initiative was taken in 2011.