Scottish ports are in a positive mood despite Brexit, finding new ways to facilitate the flow of goods and passengers while continuing to punch above their weight, discovers Anthony Harrington

As an island nation it is an obvious truism to say that ports are vital to the economic health of the UK. Richard Ballantyne, chief executive of the British Ports Association points out that 95 per cent of the UK’s trade in goods moves by sea, with ports as a whole contributing in excess of £19 billion to the UK’s economy.

Scotland’s ports, he points out, punch above their weight, given the relative size of the Scottish population as compared to that of the rest of the UK. In 2014, the latest year for which statistics are available, the total nominal value of Scotland’s international exports, excluding oil and gas, was £27.5bn. The figure for the UK as a whole was £153bn. In round figures that means that Scotland contributes just under 18 per cent to that figure of £153bn in UK exports – not a bad achievement for a nation making up just five per cent of the UK’s population.

However, Scotland has a real opportunity as far as exports are concerned. The Office of National Statistics points out that some 100 large Scottish businesses (those with over 250 employees) account for 60 per cent of all Scottish exports.

Small businesses across Scotland tend to focus on the UK and Scottish domestic markets and much could be done to improve their overseas export performance – which, of course, would generate still more business for the ports sector. Ballantyne points out that because the connection between ports and trade is so strong, economic downturns inevitable have a negative impact on port business. While 2016 was not a bad year for UK and Scottish ports the economic uncertainty generated by concerns over Brexit and the impact of changes in UK energy policy has had an impact on some port cargos, and continues to hang over the sector.

“I am quite clear that the Association, and the industry generally, is well placed to deal with the challenges that Brexit is presenting and will continue to throw up. We are working closely with both the UK and the Scottish governments to get a better feel for exactly what those challenges are  likely to be, though much remains to be resolved. However, ports have proved themselves over the years to be very resilient businesses, and this is particularly true of Scottish ports. I am confident that they are well placed to adapt to any changes that might arise,” he comments. 

“Ports are a reliable barometer of the overall health of the economy. We are yet to know exactly what the UK’S relationship will be with the EU and it is difficult to say if any economic impact is going to filter down and impact port activity.

“However, clearly the UK will continue to rely on its international gateways to facilitate the flow of goods and visitors, and the ports will remain essential to future economic growth,” he adds.

One of the unusual things about the sector is the degree to which both the UK’s privately owned ports and those managed by independent statutory trusts, are all strategically and financially independent of government. However, Ballantyne points out that what the ports sector really does need from government is a streamlined planning system and a commitment to providing an ever improving road and rail network to connect ports to businesses across the country.

“It is essential that port connectivity schemes are prioritised and included in regional and wider national planning strategies.  This is particularly vital with major road improvement schemes. Linking ports to the wider strategic road network can offer real value for money and bring substantial benefits to the Scottish economy,” Ballantyne notes.

“Generally, our transport infrastructure in the UK and Scotland is good, but there remain some challenges with the ‘last mile’ connection to some ports and there is room for improvement there. 

“We are working closely with the Scottish Government and other stakeholders, such as freight associations and interest groups, to highlight these challenges,” he comments. The quality of the roads is usually good. However, congestion at peak times can lead to bottlenecks that create significant delays for freight needing to move into or out of ports.

Despite the potential problems over Brexit, and the continuing low oil price, this is an exciting time for the Scottish ports sector, Ballantyne says. “There are a number of positive factors that bode well for the sector. We are seeing major investment schemes, such as the planned £350 million expansion of Aberdeen Harbour, and Peterhead’s major development plans.

“There are also new opportunities for the sector stemming from the planned offshore wind farm build-outs, as well as possibly a pick-up in activity in North Sea oil and gas projects. Plus we are also looking at the likely rise in decommissioning work.

“Some ports, particularly those with large hard standing areas, will have a vital role to play in the dismantling, break up and recovery processes involved in decommissioning, which looks like becoming increasingly important over the next few years,” he comments.

A recent report, Decommissioning Insight 2016, published in November 2016 by Oil & Gas UK, the trade association for the UK offshore oil and gas industry, forecast a gradual but steady rise in offshore oil and gas decommissioning for both the UK and Norway over the next 10 years. By 2015 the decommissioning market was already worth £2 billion a year so any increase could be very significant for everyone involved.

The report is the first survey ever undertaken of the scale of the UK and Norwegian decommissioning markets. There is no doubt that the market is still in an emerging phase. As Mike Tholen, Oil & Gas UK’s upstream policy director notes: “Despite the low oil price, we are not witnessing any rush to decommission.”

However, it is happening and the pace is going to quicken. The report estimates that the total amount likely to have been spent on decommissioning by 2025, will be around £17.6bn.

Over the next decade there are more than 100 platforms forecast for complete or partial removal from both the UK and Norwegian continental shelves. Over 1,800 wells are scheduled to be plugged and abandoned, and around 7,500 kilometres of pipeline will need to be decommissioned.

Amongst all the positives, one of the issues that many ports see as potentially hampering their activities is the number of environmental designations in marine areas.

“The effect of such designations is that they introduce new requirements that ports have to adhere to. They potentially introduce restraints on activities and new developments by ports by forcing them to undertake costly and time consuming assessments. These can sometimes run over several seasons and it can slow or even prevent some viable projects,” Ballantyne notes.

He says it is vital that Scottish ports are not disadvantaged as against rival European ports. “We have recently written to Scottish government ministers outlining a new post-Brexit concept of port zones.”

The idea behind these port zones, adds Ballantyne, is to help safeguard ports of all sizes and types from having such designations slapped on them. It is also to help ports of all sizes to grow by providing fast tracked planning approvals and consents.