Executive summary

1. Shipping drives global development. Ports are our gateways to the global distribution network. Trade accounts for nearly 30% of our GDP. With an open economy, the UK's economic fortunes today and tomorrow depend more than ever on our access to efficient, reliable and resilient worldwide connections.

2. Current interest in port development and acquisition is both a sign of confidence in our economy and a manifestation of the rapid growth in global trade. The market is demonstrating that it can and will invest in the future. But ports have wider impacts upon our economy, our society and our environment, at national, regional and local levels. The Government is necessarily involved. Our role currently focuses on 'market failure' - a term which does not imply criticism of the market, but merely conveys the fact that markets cannot solve all our problems on their own. The question for this review is: have we got this right? Have we correctly identified the issues which require Government intervention? Are we intervening when we need to, in the right ways?

3. This consultation document invites your views on the future of our ports, looking ahead to about 2030. It focuses on the Government's relationship with the ports industry in England, Wales and Northern Ireland. (Ports policy for Scotland is being examined in a separate consultation on the National Transport and Freight Strategies being developed by the Scottish Executive.)

4. The key issues examined in this document include:

• the likely future demand for port capacity;
• how to ensure that the market response to that demand reflects the objectives of sustainable development
• how far the Government should reflect regional development objectives in encouraging the future provision of ports capacity;
• how the Government can help smaller ports, which in many cases are owned by trusts or local authorities, to realise their potential as businesses and for the benefit of their wider communities.

The General Policy Framework

5. Chapters 1 and 2 place these issues within the policy context set out in The Future of Transport ¹ . In a sector which must respond to the wider market, in which commercial investment drives development, we start from the principle that Government intervention should aim to remedy demonstrable market failures. Existing methods of intervention, such as the land use planning system and environmental regulation, should change only where

• they fail to deal adequately with market failure, or
• there is scope to simplify or relax controls while delivering wider economic, social and environmental objectives.

Examining the Growth in Demand

6. Chapter 3 and Annex C summarise long-term forecasts of demand for each main freight market sector which have been produced for the Department by MDS Transmodal. These forecasts should help to inform assessments of future capacity requirements, including on connecting roads and railways. The forecasts predict sustained growth at national level in container and ro-ro traffic, significant growth in motor vehicle imports, high growth in certain bulk commodity traffics (notably liquefied natural gas or LNG) and generally moderate growth or decline in other bulk sectors (though there will continue to be changes in the pattern of demand, e.g. for coal imports, through individual ports).

7. This assessment tends to confirm the strategic economic importance of container terminal and ro-ro port capacity, and of inland road and rail connections to take unitised traffic in lo-lo and ro-ro forms.

8. Because of its strategic importance, MDS Transmodal have produced for us a more specialised report on the transhipment of containers, which is also covered and summarised in Chapter 3 and Annex C.

Impacts of Ports and Port Development

9. Chapters 4, 5 and 6 deal with the broader impacts of port activity at national, regional and local levels. In Chapter 4 we address:

• the importance of ports to international trade and economic development, including the Government's strategic interests in competition and resilience. We consider that the current regulatory framework provides sufficient safeguards for competition between ports;
• the importance of ports to regional development, examining transport and wider arguments for Government involvement, with questions on the nature and scope of possible interventions and their justification;
• the Government's role in respect of smaller ports, again with questions about the case and criteria for possible interventions.

10. Chapter 5 examines the issues relating to road, rail and inland waterway connections to ports, including their funding. Among the questions asked are:

• Should more be done to encourage short sea shipping?
• Are the external impacts of ports adequately dealt with through regulation, development funding and by other means?
• How far can or should port developers fund inland transport networks, which necessarily offer open access to many users?
• Are port development issues sufficiently taken into account in network providers' investment criteria and priorities?

11. We consider recent experience, current policy and parallel consultations on the issue of developer contributions to inland transport networks.

12. Chapter 6 covers the environmental impacts of activities at and around ports. These are mainly local in nature. International shipping has global environmental impacts, but these are outside the scope of this review. We discuss noise, local emissions and waste as impacts of port operations and ask whether these are dealt with adequately under present arrangements. (Habitats considerations often dominate when major port developments are proposed, but the salient questions here relate more to the application of the EU habitats Directive, and are dealt with in Chapter 9.)

13. Safety and security are important considerations too, but the review does not invite substantive comments on these issues. We consider that the existing policy framework is largely effective and discussion is confined to the background, set out in Annex B.

The Policy and Regulatory Framework

14. Having examined the areas of potential market failure, we invite views on the effectiveness of the main Government interventions today.

• 15. Chapter 7 takes an overview of competition in the ports sector and its regulation. The potential impacts of EU competition policy measures are also covered.
• 16. Building on the findings of the Municipal Ports Review and our earlier Review of Trust Ports, Chapter 8 examines issues raised by the differing ownership structures for UK ports and looks at the historic legacy of port safety legislation.
• 17. Lastly, in Chapter 9 we ask what scope there may be to improve the workings of the planning system for ports. (It is beyond the scope of this review to re-examine the land use planning framework, which has recently been reformed.)

15. The debate on these issues is open to everyone. We are interested in your comments, whether or not you have specialised knowledge of the ports industry. The broad, strategic questions are shown in bold type. The more detailed questions may be of greater interest if you have prior knowledge of the ports industry, though our consultation is by no means restricted to those with such knowledge. A summary of the questions may be found in Chapter 10. You may respond by e-mail or by post (see paragraph 10.2 for details).

16. You may also wish to consider and respond to the separate consultation document on the Government's Marine Bill, published on 29 March.

¹ The Future of Transport — White Paper Cm 6234, DfT, July 2004.