Deloitte Report: Port Services Directive would be disastrous

29 September 2005

Deloitte Report: Port Services Directive would be disastrous

Raised costs, the formation of monopolies, reduction in employment and deterioration in the quality of port services: these would, according to a report commissioned by the Ministry of Transport from consultancy firm Deloitte, be the consequences of the introduction of the proposed European Directive on Port Services. At the same time, not only the dockers' trade unions but also the European port authorities' organisation and employers' group Feport have distanced themselves from the proposal, sealing the directive's fate.

The Netherlands' official body the “Havenraad” (Ports Council) will shortly adopt a position on the directive, The European Parliament's Committee on Social Affairs and Employment and Committee on the Internal Market have already voted in favour of scrapping the proposal. The only people who seem to be in favour of a directive which many see as as best unnecessary are the Christian Democrats of the European Parliament's so-called European People's Party. At the end of the year, the Parliament's plenary session will vote definitively on the measure.

Deloitte's criticisms are remarkable given the group's history of supporting liberalisation in other transport sectors, including public transport by bus and train and the transport of goods. On this occasion, Deloitte have stressed the negative aspects of “market-working”.

The Netherlands' ports are currently regulated by European and national environmental, labour and safety laws as well as local rules. Adding to this complex of regulations a swathe of new measures needed to govern a system based on the public tendering of concessions would lead to superfluous bureaucracy affecting both port authorities – who would be obliged to prepare this tendering – and the firms who would be required to register to receive a permit to operate and then recruit the necessary specialised personnel. This would benefit larger firms at the expense of smaller rivals. Because concessions would be limited in duration, it would be less attractive for firms to invest, and therefore harder to attract external capital, creating growing legal uncertainty.

Competition for concessions largely concerns price. Harder-to-measure elements such as commercial goodwill, clientèle, logistics and software networks, education and training programmes and the company's overall image – which also affect the prices – are not taken into account. This could lead to a situation in which firms wait until they can take over a contract from another operator relatively cheaply. This will certainly be possible, because the proposed directive offers no protection to employees affected by such a development. A number of parties in the European Parliament oppose making it obligatory for firms taking over contracts to retain personnel on the same conditions as they previously enjoyed. This gives companies little incentive to establish proper structural internal training or education systems. These typically last for from two to four years and take a long time to produce a return on investment. In turn this will lead to a reduction of quality and deterioration of safety standards in ports.

The introduction of so-called “self-handling” is also seen by Deloitte as potentially disastrous. It would mean that firms operating at ports would be obliged to allow third parties to use port materials and equipment to load and unload ships. Apart from the fact that this would make proper planning and flexibility impossible, it would also create a serious risk of accident, injury and damage. These risks would have to be covered by increased insurance premiums. In addition, port authorities would have to develop new forms of supervision if national regulations were to be maintained in the face of 'self-handling' by workers from other countries. The effect on employment in ports would, according to Deloitte, in contrast to what the European Commission has asserted, be negative.

All of these arguments taken together lead Deloitte to a conclusion which accords with the broad consensus in ports, namely that “This European Port Services Directive is not only superfluous but actually counter-productive.” In response to a request from the dockers' union the SP has sent a copy of the Deloitte report to every Dutch Euro-MP. The SP's own MEP Erik Meijer will shortly propose to the Transport Committee that it join the other two parliamentary committees in voting to scrap the measure.

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