JOINT COMMITTEE ON TRANSPORT debate -
Wednesday, 19 Nov 2008

Irish Ports: Discussion with Irish Exporters Association.

Chairman

I draw witnesses' attention to the fact that members of the committee have absolute privilege but that privilege does not apply to witnesses appearing before the committee. Members are reminded of the parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I welcome Mr. John Whelan, CEO, and Mr. Howard Knott, director of logistics, of the Irish Exporters Association. I invite Mr. Whelan to make a short presentation. We will then have a question and answer session.

Mr. John Whelan

I thank the Chairman and members of the Oireachtas Joint Committee on Transport for the opportunity to address the committee today. We forwarded an initial statement, which I do not propose to go through.

The current economic downturn is primarily affecting the construction and retail home sectors, not so much the export sectors. In the first nine months of the year the figures indicated that the container traffic out of Ireland continued to grow. It is up by approximately 4%. The main feature on which we need to focus to ensure we continue to have manufacturing exporting out of Ireland, and to meet the next upturn when it undoubtedly comes, is that we continue to invest heavily — we have done quite a bit — in the infrastructure of ports, road access, bridges, tunnels and rail connections to ensure that we offer competitive, efficient transport for goods coming to and going from the country. I will cover some of the key overview points and then I will ask my colleague, Mr. Knott, to refer to the ports, the current position and key issues in that regard and where is the investment so as to give the committee a vision of how we see the current and future issues affecting exporters.

The main point on which Ireland as a manufacturing country needs to focus is the fact that manufacturing costs generally are falling. We do not have much room for manoeuvre on the labour costs front but we can overcome some of the shortfalls in terms of an efficient supply chain. The ports and where they fit in is important in that regard. The current vision statement in terms of the Department of Transport's strategy is inadequate to meet the objective indicated. That said, we have been supportive of the Department's changes to the port boards' structure, as outlined in the Harbours (Amendment) Bill. We have been seeking that for some and we think it will help to refocus ports into the areas that should concern them.

We also welcome the fact that the Irish Maritime Development Office, IMDO, is now part of the Department of Transport reporting to Mr. John Lumsden. The new vision that should be included is that ports should become key nodes in the transport chain they service attracting new types of logistic operators and new types of investment. Whether we like it or not the reality is that one can produce the best goods in Ireland for international markets but if one cannot get a shipping line interested in moving the goods then they will not get to the required markets and therefore will not sell.

There is a need for ports to attract shipping lines; they do not come in of their own volition. Ports need to be active and to offer the quayside facilities to ensure that a shipping line is attracted there. In that regard they are acting as mini-IDAs. That role has been actively pursued by many major international ports. We need to become slick in that area if we are to continue to offer manufacturing companies options here.

Knowing the state of the Exchequer's coffers we will not focus on the call we have made for decades for more investment in ports, but there is a need to ensure that ports are freed up to seek alternative investment at a value to the taxpayer. The focus of the vision statement does not reflect what we believe it should. If that was changed, it would help the port management and other Departments to interface more effectively with the Department of Transport in the areas of port structure. The big issue is to drive down costs and one does that by allowing bigger ships to come into ports. A ship that handles 1,000 containers has virtually the same staffing element as one that carries 2,000 containers, so one's unit costs drop if one can take bigger ships. The Irish ports cannot take the big ships.

In his outline of the ports Mr. Knott will indicate to members what issues arise. We need to start investing now. It takes time to get the ports up to the required space. Hence, in Dublin the 25 hectares that are required is something on which we have all been dragging our heels for too long. That needs to be freed up because it will be the key deep sea terminal, as it will be able to take the larger ships and that will drive down supply chain costs.

Equally, a great deal of work was involved in the forward planning outlined by the port of Cork. That includes the release of Tivoli, which is out of capacity and was wrongly positioned, and also the city quays. That released additional funds so that the port authority could get on with the Ringaskiddy development and offer a second option on the deep sea. An Bord Pleanála blocked that on 25 June on the basis that there was inadequate road and rail connection. There is a lack of joined-up thinking. We would be very grateful if the committee members have any suggestions on how to push those areas together as they know better how Departments operate. The competitiveness of the export sector would greatly improve if we can ensure that happens.

We do not have any direct shipping to the United States which, after the United Kingdom, is our biggest market. It is also a major import market for us. The reason for no direct shipping is because we do not have ports that can take the type of ships that operate efficiently between here and the US. We have been working on the matter for the past two years with some of the big exporters, North and South, to the US. Bombardier, in particular, is anxious for us to come up with solutions because the new CSeries aircraft that was announced at Farnborough in September finally got off the ground. The amount of work that goes into Northern Ireland is very much predicated on it getting a better direct shipping service to the US where it can get the wings and other sections to go into the fuselage assembly there. That is one of the many reasons we need direct shipping to the US.

Huge volumes are coming out of the Pepsi Cola second factory in Cork, which also supplies the US with ingredients. The continuation of output in Cork hinges to a certain extent on getting better direct shipping lines and faster access back to the US. The old Pepsi Cola factory covered Europe, the Middle East and Africa. The Puerto Rico plants were closed and Ireland got the contract to service the north American market. If we want to continue to do that we must have efficient shipping supply lines and ports that are capable of taking the latest ships. My colleague, Mr. Knott, will outline detail on the ports and that will help to better inform the committee.

Mr. Howard Knott

I will pick up from where Mr. Whelan left off. He referred to An Bord Pleanála and the Oyster Bank decision of June last. Why that exercises the mind so strongly is because of the number of major multinationals based in the Munster area and their requirement to be efficient in the way they ship. The requirement is not purely a day to day matter, it is more fundamental than that. I wish to pick up on another company in the region in the medical devices business. It is an extremely efficient, US-owned company but is part of a group with plants in China, South America and elsewhere.

The plant in Cork wished to continue developing a product it had started making very effectively and wanted to increase the production volume but the company asked it to await the result of a competitive tender including the factory in China and two others to determine which would be most effective at producing the product. The product was destined for the mid-west of the United States. The company concluded the factory in Shanghai was the best positioned, not because it could deliver the product any more cheaply than the factory in Cork but that it could have the product delivered to the warehouse ten days sooner. From Cork, the cargo must be shipped eastward to Rotterdam, at which point it must be placed on board a ship that travels back westward past Cork towards the United States. This is why ten days are lost. While this is a slightly over-simplified example, it shows part of the dynamic associated with multinational companies, which account for 90% of manufactured exports from Ireland. We must, therefore, be very much aware that these companies need a very high level of facilitation.

I have focused sufficiently on the Cork area, except to say that Cork Harbour is unique in Ireland in so far as the numbers of laden containers travelling in and out are similar. In other consumer-led ports, such as that in Dublin, only one container in three may be going out laden — the rest are shipped out empty. There is, therefore, quite a distinction. We referred to PepsiCo but there are other companies, such as Dell and Wyeth, suffering similar problems in this area.

It is very important that the Bord Pleanála decision be revisited in view of a realistic analysis of the position on rail freight. If the position on rail freight was a reason for not accepting the Oyster Bank proposal, we must be certain rail freight will be developed actively. Perhaps we will return to this later.

We know quite a lot about Dublin Port. It is the largest in the nation in terms of volume. All manner of goods and passengers pass through in serious volumes. It is not totally a national port in that two thirds of its business concerns the greater Dublin area. It has developed considerably since its establishment in 1996. The Dublin Port tunnel has been very worthwhile in terms of taking the juggernauts from the city streets and reducing the bad press received by the port. It has not, however, helped greatly in terms of reducing the cost for the transporters of good, particularly those going west and south, who must travel out towards the airport en route. It is vital to the development of eastern Dublin that the eastern bypass be completed in a reasonable time. This would be very useful.

One cannot talk about Dublin's development without mentioning Drogheda Port Company's proposal for Bremore, close to Balbriggan. The discussion on this has been well rehearsed. It is being developed very actively by Drogheda Port Company and its partners and it is expected to be opened in 2013. It will serve two roles. First, it will enable a port to continue to exist in the Drogheda region. The existing port in Drogheda is too small for the size of the ships required if transportation is to be economical. Second, it will remove pressure from Dublin and give manufacturers, exporters and importers a competitive transit point for their goods. The Irish Exporters Association is very supportive of the development at Bremore but does not in any way regard it as an alternative to Dublin Port. The figures do not support this view in any manner.

Greenore Port has been bought by Dublin Port and One51, both of which have a 50% stake. The port is proceeding quickly with the development of better bulk facilities and, potentially, container-handling facilities. This is a welcome development.

While I suspect the ports in Northern Ireland do not fall strictly within the brief of this committee, exporters and importers regard both jurisdictions as part of one island. Ports such as those at Warrenpoint, Belfast, Larne and Derry are factored into the calculations of a number of operators. Warrenpoint and Belfast ports have substantial development plans but none of the developments proposed is to be as large and deep as the one in Cork or the 25-hectare development in Dublin.

The Port of Waterford has developed a very strong niche in bulk cargo for the general south Leinster-north Munster region. It has had much success since the establishment of Bell Lines. It was Ireland's first proper container port and remains the only one actively involved in moving containers thereto and therefrom by rail. The Minister recently opened an extension to the quay to enable the port to handle more general and bulk cargos. An issue arises with regard to the depth of the river and the depth on the bends but it is nevertheless a thriving port.

Rosslare Europort is owned by a company that is in itself owned by the CIE Group. It has been the main port for ro-ro shipping involving ferries serving continental Europe in addition to being the main port for the southern corridor to south Wales. Within the past month, there has been a dramatic step change in the whole operation at the port. At the beginning of this year, Irish Ferries introduced a new, larger and much more effective ferry on its service to Cherbourg and Roscoff. The Belgian line, Cobelfret, has introduced a new weekly service from Zeebrugge and Rotterdam directly into Rosslare for containers on trailers. In the space of three or four weeks, this service has already developed considerable momentum and patronage and is demonstrating its value as an economical and fast way of transporting goods between Ireland and the Continent, not only the nearest parts of the Continent but also further afield.

It is probably worth giving the committee a picture of what we are talking about. This is something different to what may be seen in the normal ferry in so far as a truck and trailer leaves the factory in Ireland for Rosslare and are disconnected, one from the other. The trailer is put on board the ship and two days later it is in Zeebrugge or Rotterdam. It is picked up by a driver who is probably employed by the Irish company that started the whole transaction, and he takes it onward into Europe. There are no driver costs or anything else while the trailer is on its way, and that can be a very economical way of developing business.

Similarly, two weekends ago, a French line under the name, LD Lines, part of a major group, Louis Dreyfus, opened a Le Havre-Rosslare service. This is for passengers as well as freight — and for trade cars, too, although one might wonder how many cars will be coming in over the next six months, but that is a risk they are taking. Again, this service has the potential to be very useful to Irish exporters, going out as it does over the weekend and landing in Le Havre on Sunday evening from whence the trailers are ready to go throughout Europe. One may get from Le Havre to the Swiss border within legal driving hours and this makes it very attractive compared to other ports that do not have that facility. Rosslare is developing and the CIE group is putting a good deal of effort into it. It has gone forward with plans to engage further with dredging to enable the port to take larger vessels — as is has to do if it is to maintain the onward momentum — possibly in 18 months time. It is therefore important for CIE to get ahead with these developments.

We should also mention Shannon Foynes, which now incorporates not only Foynes Port and the Aughinish facility in the River Shannon but takes in Limerick Port as well. Foynes is making a determined drive towards becoming the major port for large volume shipments of bulk cargoes. Again, a new LNG gas terminal is being developed there and I believe the sod was turned only a matter of some weeks ago.

This brings me to the final issue, namely, the connection of ports with the hinterland. As Mr. Whelan said earlier, we are talking here about a supply chain. The port is only one small link in the chain, while the ship is clearly another as is the truck or rail freight wagon.

Rail freight is something we have neglected to a great degree in Ireland over a number of years. In truth resources are constrained for the development of the Irish rail system and have been over many years. When the resources became available, it was considered that there were two high priorities. One was to do with the infrastructure of the actual track, signals and so on. The second was the rolling stock, etc., for carriage of passengers. We contend that those investments have been made and the rolling stock is in place, so now is the time to optimise the use of the infrastructure by making a serious push back into the rail freight business.

It is not true to say that Ireland is too small for rail freight. In fact, it is curious that perhaps the most successful rail freight operation in Ireland is basically no more than 20 miles from loading point to discharge point. That is in County Limerick where material is being taken from a quarry to a cement plant. Equally, many members will know about the ore trains coming from Navan Mines to Dublin Port.

We mentioned Waterford earlier and the connections there. The DFDS Container Line — previously Norfolk Line — which operates through Waterford now runs four trains a week to Ballina very successfully. It ran two trains for quite a while, but in recent months they increased this to four and it has a major effect in the acceptance of this as a means of transport. Not only are there environmental benefits from taking 60 truckloads a day, potentially, off the roads, but there are economic advantages. If people operate strictly within driving rules, it is virtually impossible for a truck to go from Waterford to Ballina and back in a day. If there is no alternative, either two drivers must be employed, which pushes up costs, or the factory in the west is compromised. To have an efficient rail operation gives that company the opportunity to transport its goods in an economical and environmentally friendly way.

Equally, the committee will be aware that there has been a significant ore find in the Tipperary region, close to Limerick Junction. Clearly, when and if that comes into production in three or four years' time, it will make no sense to send the product by road to port. It would make perfect sense to send it by rail to port. Ports such as Dublin can accept rail freight. Their facilities are all in place. There is, however, a need for a rail freight company, whether Iarnród Éireann or some other operator — under EU rules other operators have certain potential rights to come here. There is the potential for such operators to offer their services to exporters and importers to drive costs down and do something good for the environment.

That is some overview on the ports and we shall be delighted to take any questions.

Mr. John Whelan

I should like to add one point with regard to rail freight. We understand that Ireland has had a derogation for five years which is running out. It is understood that there will be an attempt to get a further derogation for three years. We recommend to the Oireachtas committee that this course should not be pursued. A much more sensible solution, as with the ESB, would be to have an independent regulator so that people can bid to hire the line, as DFDS does in Waterford. Two other operators wish to lease the lines but with Iarnród Éireann being both owner of the infrastructure and operator, that is not a suitable way forward. Besides proceeding with the directive to open up the market, we also need to have an independent regulator for the infrastructure so that independent operators may bid to use it.

Deputy Thomas P. Broughan

We have the new DTA, which will become the national regulatory authority.

Mr. John Whelan

I was not aware of that. Is it intended it will become the regulatory authority for rail, too?

Deputy Thomas P. Broughan

I presume it will be the regulatory authority for all transport, yes.

Mr. John Whelan

That could do the trick.

Chairman

I thank you both for your contributions. Before we go into the specifics, Mr. Whelan said recently, to quote him, that Ireland needed a new vision for its ports, "one in which the whole Cabinet buys into, and which gives Irish industry the maritime infrastructure it needs to be competitive". He referred to unprecedented growth, with volumes doubling every decade, and said that despite productivity improvements, Irish port capacity was reaching breaking point. He went on to point out that there are competition challenges for ports and there is a need for better use of the strategy to integrate ports with inland transportation, that this must be given an urgent makeover and that real dialogue with the key users of different types of ports must begin in earnest.

In the statement, the claim is made that it appears the Department of Transport is often at odds with Ireland's port companies, and that there is a lack of understanding of the needs of ports in terms of cost competitiveness and effectiveness. We are in pretty dire straits at the moment in the development of our port infrastructure. Several of the issues raised here shows that we are in a situation with many contradictions. For example, the witnesses mentioned the desire to develop rail freight, yet Iarnród Éireann is pulling out of such business. At the same time, An Bord Pleanála refused permission for construction of the deep water port in Ringaskiddy because of a lack of rail freight.

Is it realistic to develop serious rail freight infrastructure? The best example mentioned was the use by Pepsi Cola of four trains per week. I understand that the company owns those trains and runs them on Iarnród Éireann lines. Can the witnesses give us figures for the amount of tonnage of rail freight in this country if we had adequate infrastructure? How can we move away from road freight to rail freight? Nobody would disagree with such a move, but as we only have a limited amount of rail capacity into ports such as Rosslare and Waterford, it would involve significant rail infrastructure development. When I was a Minister of State with responsibility for marine and natural resources, I tried to get more rail freight from Waterford to Dublin. Iarnród Éireann could not provide it because it could not open level crossings at night, which is a ridiculous situation.

There is an issue regarding the need for extra capacity in Dublin Port. How much of the product coming through the port that is being transferred outside Dublin could realistically be transferred to ports outside Dublin? The witnesses mentioned the very significant developments in Limerick, and we will soon be going to see Limerick Port. Is there potential for ports like Galway, or is it a question of developing Foynes to service Limerick and Galway? What is the increased potential for places like Drogheda and Greenore? Is there a necessity to move Dublin Port out to Bremore, as is being proposed?

Mr. John Whelan

I will take the last point first. When we talk about moving a country's main national port, the large companies begin to get worried, and we only have a relatively small number in manufacturing in Ireland. When head office wonders how to supply Europe, the Middle East and Africa and the US, these companies start thinking of alternative options. They get worried that Dublin Port might be considering restricting the port, moving to another greenfield site and not being able to meet the next shipment coming in. These companies would not know anything about the new greenfield site, such as its cost structure, tidal structure and so on. We have put a nervous wave out there, and right now that is the last thing we want to do.

Dublin Port is seen internationally as a very efficient port. It has got there the hard way by buying out many restrictive practices. It has done much joint venture development on its terminals. The last thing we want to do at this stage is to leave a doubt in anybody's mind that we have any notion of restricting the port during its legitimate development as a commercial port. That is not to say the port will not meet its environmental responsibilities, because it will. However, we need to settle the issue. Bremore Port needs to continue to develop as an alternative port. When it is up to speed and able to offer competitive services, then the market will dictate where it goes. However, we have to be very careful. We cannot tell companies not to locate close to Dublin if all the services are there. We have to market Ireland with its best features. We must market our best port, which is Dublin. Other ports must be assisted.

Dublin Port does not need any financial assistance, although ports such as Shannon Foynes may need assistance to get to a position where it can compete. However, it is a bit like our universities. We must pick ports that will be specialist in certain areas. Shannon Foynes Port will probably be a good port for bulk freight and should get an international standing in that area. It could then create a hinterland of activity that will balance all that. It already has Aughinish and needs to keep going in that mode. Rosslare Port is making very good progress and we need to keep supporting it in its direct ro-ro shipping to the Continent. It is the nearest point and offers the option of missing the land bridge and all those environment issues that are coming down the line.

We will get back to the committee on the rail issue. We are not talking about rail replacing all the road transportation, but there is a solid option to replace about 10% of road transport. This could go a long way to meeting our Kyoto emission targets, as transport is one of the big CO2 emitters. Shifting bulk that is more suitable to rail from the road makes eminent sense. We have a few keen operators that want to make runs from places like Limerick to Dublin. We have another interested party that wants to go from the north east into Dublin via rail. When these are up and running and offering a service, others will then come in. However, at no stage will we see it going beyond about 10% of total transportation needs, but that 10% could be quite critical and take some of the very heavy vehicles off the road.

Chairman

Is Mr. Whelan saying that with deregulation, another company could come in to provide a service on the CIE network?

Mr. John Whelan

We have been knocking at the door of the chief executive of Irish Rail for the last year and giving him options. He finally advised us in writing that his problem was getting train drivers, but that he hoped to have them in the fourth quarter of this year. We are well into the fourth quarter and we are still asking him has he got the drivers ready to go, because a company that wants to move rail freight from the midlands to Dublin is awaiting the go-ahead.

Chairman

How long is the association waiting for this?

Mr. John Whelan

This offer was made in January.

Chairman

We cannot have extra trains running at night to provide freight transport, because CIE cannot get train drivers.

Mr. John Whelan

This issue is about the train drivers. This all goes back to the ILDA days, when the members of that trade union were all in rail freight and the drivers locked themselves into the CIE board. There is a long history there. The train drivers were decimated and the rail freight was part of the company's campaign to get rid of the ILDA. The company is now trying to get train drivers back, but it has taken a long time. The CEO made the commitment that he would have them by the fourth quarter of this year, but we are still waiting.

Chairman

Do we still have the problems I mentioned, where level crossings cannot be opened at night?

Mr. Howard Knott

That problem has finally been resolved. The infrastructure development has been done on Irish Rail, and it can now function in a modern, efficient way. The driver problem has been a huge one since the intervention of the ILDA but Irish Rail has put much effort into training new drivers, particularly in the last year or two. It has taken a long time for it to get over the industrial relations aspects of the question that if it takes on more drivers, the amount of overtime is reduced — the committee has probably been through this discussion many times. However, that situation is well on its way to resolution.

Another issue is that while Irish Rail is subvented by the taxpayer on the basis that it provides a service to the nation in carriage of passengers, it is not subvented specifically to provide a rail freight service and the company must meet from its own funds any resources that are required for a rail freight service. Those resources would be specifically to do with the wagons on which containers or other cargo would be taken as well as the lifting, loading and discharging of equipment at either end of the line. This is a problem the railway company is now facing up to and seeking to address.

To answer the other related question, under competition rulings throughout the EU there has been a freeing up of the whole operation of the rail freight business. This initially happened with the passenger side and has now happened with the rail freight business, most significantly in our next door neighbour, Britain, where the network is totally operated by private companies using the network rail infrastructure. After a tricky start, the results are now very positive and the railway companies are developing as strong contenders. There are even rail companies which are well known as trucking companies, including that of the very well known Eddie Stobart — if one drives around Britain, one is bound to see his trucks — who has gone into rail freight and runs his own trains.

The set-up with DFDS Container Line out of the port of Waterford is a halfway house model. It charters the train completely from Irish Rail, like someone hiring a bus for an outing — it pays for the job and whether it is full or empty, it pays the same. Irish Rail provides the rolling stock at a certain time and takes it to a certain location as required. DFDS Container Line is responsible, so if that train is empty, that is its problem but, on the other side, it knows a full year in advance exactly what its costs will be and it can price its transport accordingly. It can also, and does, re-market some of the capacity on that train.

Chairman

It is ludicrous in this day and age that we cannot have more rail transport because we cannot get drivers. That is an issue we will take up with Iarnród Éireann.

Deputy Thomas P. Broughan

We are hearing one point of view here. We need to talk to Irish Rail. For example, it was the Irish Exporters Association and its members that made the decision years ago to move towards road use, which was due to the cost parameter in those days. The association is now coming back to rail-based approach when it suits it.

Deputy Fergus O’Dowd

I welcome the delegation. This has been a very important and informative discussion. The key is to restore competitiveness in our economy. We were about the fourth most competitive country in the world five or six years ago and we are now down around 22nd. The key point the witnesses made about infrastructure and investment, whether private or public, is essential to restoring our economy and getting jobs moving again.

While I do not have full knowledge on what happened in Cork, I presume the development that was refused by An Bord Pleanála came under the strategic infrastructure Bill. I find that amazing and alarming given the whole idea of the legislation was that issues regarding whether it would be a rail link would be fully discussed at the preliminary stage. The way it should work is that one would put a proposal to An Bord Pleanála, it would decide whether it will take it or not under that legislation and all aspects are then discussed. It should have been an open and shut case.

It is very negative that this decision was made under the legislation which we put through the Houses to facilitate decision-making, not to stop development, which is the import of this decision. Ultimately, An Bord Pleanála has a mandate under which it must have due regard to Government policy. It seems, from the way the delegation has presented it, a very strange decision.

Mr. John Whelan

There was huge surprise.

Deputy Fergus O’Dowd

It does not make sense. While I do not know the full detail, the port map should be available.

I welcome what was said about rail freight. When we read about rail freight, one of the reasons advanced as to why it does not work well here is that journeys are much shorter compared to other countries where it works more efficiently and effectively. However, given the information provided on the 20-mile route from Limerick to Foynes——

Mr. Howard Knott

It is actually from Birdhill, close to Killaloe, to the cement factory in Limerick.

Deputy Fergus O’Dowd

The key point is that in terms of the carbon footprint of our transport industry, the arguments in favour of rail freight make a lot of sense. The figure of 10% could be significant.

With regard to Dublin Port, it was said that two thirds of the businesses are within the M50, more or less, and one third beyond. I live in Drogheda and am a Deputy for County Louth, a constituency which contains the port of Greenore, so I have a major interest in this issue. Legislation is going through the Oireachtas at present to facilitate the new port at Bremore but the biggest problem is that the infrastructure will not be available if the outer orbital route is not built. Deputy Kennedy and myself have noted that the key point about a new port is that one must be able to get in and out of it while avoiding the city of Dublin. Anybody who travels on the M1, as Deputy Kennedy and myself do most mornings at 6 a.m. or 7 a.m., knows it is chock-a-block with traffic and drivers cannot get past the airport. Traffic is moving at about 12 km per hour once it gets to the Malahide Estuary. The key point is that if we are developing new ports, we must have the infrastructure in place rather than creating a bigger roadblock.

As a country, we need to work together. I respect what Deputy Broughan said about union relations within different companies but the only way we will recover as an exporting nation is by investing in the modernisation of infrastructure and looking at new ways of managing projects. I concur with everything the delegation has said in this respect. I very much welcome this debate.

Deputy Thomas P. Broughan

I welcome the members of the delegation and thank them for the presentation. I would like to have a copy of Mr. Knott's presentation in regard to each port because there were some interesting points about some of the ports with which we would not be totally familiar. I support the idea of having as much freight transport by rail as possible. Comparisons have sometimes been made against us in regard to, for example, Scotland, which would have a similar type of economy. The Scottish Executive has a port vision which seems to entail having more reliance on rail. However, there are some restrictions with rail. For example, the goods — some of which we hope are produced in Ireland — conveyed in huge container lorries to retailers such as Marks and Spencer on Grafton Street cannot be transported by rail.

I welcome the delegates' comments on Bremore. I am a strong supporter of Dublin Port, with one caveat, namely, that I am not convinced of the necessity for a reclamation project, given that some 600 acres are already available to the port company. Is the Irish Exporters Association in favour of the reclamation of some 52 acres in Dublin Bay? Is this necessary for the future successful growth of the port given that, as Mr. Whelan acknowledged, Bremore will, as time passes, take some of the vehicles of larger freight size coming into the Dublin region? Did the Irish Exporters Association make a submission to An Bord Pleanála in the course of the current phase of hearings, supporting the reclamation of the port in the area in front of Clontarf? As I said, I am a supporter of Dublin Port but not of the reclamation project.

Mr. John Whelan

We did not make a submission in the course of the current round of hearings. However, we have done so during several of the previous hearings, and we have been quite vocal on this issue for some time. The reclamation is complete and has been ready to go for a long period. However, there has been a dispute in terms of foreshore licences versus planning permission licences to complete a series of terminals. Nothing will change in terms of the visuals in the area. It is a question of location and the water depth there is ideal for a deep sea port. Ships these days are attractive and in terms of the visuals, from Clontarf or anywhere else, it is an attractive sight to see the ships coming in. One is not forced to look at huge plumes of industrial smoke; rather, it will be a nice, clean operation.

The location offers deep water, easy access and easy turnaround. There is currently a problem at Dublin Port in regard to turnaround, with vessels having to go backwards, forwards and in. Ease of access, speedy turnaround and the availability of deep berths are the advantages on offer if the development of the 20 hectares proceeds. The previous Taoiseach, Deputy Bertie Ahern, promised us two or three years ago that he would push this through. At that stage, the focus was the conflict between foreshore licences and planning permissions.

Deputy Thomas P. Broughan

I am interested to hear what the previous Taoiseach told the people of Clontarf and the northside. He used to tell us many things on the Order of Business, and there were 100 interpretations of what he might or might not have said. We miss that in some ways.

Mr. John Whelan

The interesting point is that nobody expressed opposition to the progression of the project. The difficulty was that the foreshore licences could not be issued because the planning permission licence was not issued. Likewise, the planning permission could not be issued because the foreshore licences were not issued.

Chairman

To clarify, is Deputy Broughan making the point that there are numerous other locations within the port which could be used to expand pier capacity?

Deputy Thomas P. Broughan

Yes, that is my contention.

Chairman

Why are such options not being considered?

Deputy Thomas P. Broughan

The concern for Dublin citizens, particularly those living in the bay area, over an extended period, is that Dublin city has marched to the east. This building is sited on land that was on the sea front or even under water 1,000 years ago. As the delegates may know, Dame Street was originally called Dam Street. The port company sees itself to some extent as a major land development company and is operating on the basis that the newly reclaimed land will replace land which will form parts of developments that are now east of the convention centre and east of the East Link Bridge and so on. That is the concern.

Chairman

Allied to that, does it not make sense for Dublin Port to continue as the thriving port it is, that new developments for larger ships should take place at Bremore and that there be synergy between the two?

Mr. John Whelan

The difficulty is knowing what will happen in Bremore and when it will happen. 2013 has been mentioned but that will not transpire if An Bord Pleanála decrees that any further developments cannot go ahead because of the absence of road access. The international shipping community, in investing in and maintaining its plants in Ireland, does not want to know about the minutiae of operations of a new port. It is always difficult to get a new port up and running and to see what facilities it offers. Dublin Port is a known quantity with a known level of efficiency. The international shipping community knows the port company has completed terminal projects well in the past and can be confident it will do the same in this case and that it will meet international requirements.

That is not to say that Bremore should not proceed, but we do not know when it will reach that point and what it will deliver. That is the question. We do not want to see the development at Dublin Port being blocked on the basis that Bremore might get there at some point in the future. Another important factor is that the development funds for Bremore are coming mainly from overseas, which adds an interesting dimension. I reiterate that we are not in any way knocking Bremore. We are delighted to see it go ahead but it could delay the entire scenario, whereas the money is there for Dublin Port and is ready to go.

Deputy Thomas P. Broughan

My next question relates particularly to the port of Cork at Ringaskiddy. We are moving into an era where any proposal for a major infrastructural development must demonstrate joined-up thinking. One cannot come forward with a major infrastructural development unless the roads are in place. In the case of residential housing development, for example, there is a recognition that no large developments should take place in the absence of public transport provision, preferably a fixed transport system. Is it not the case that this element was missing in regard to the issues we are discussing today, an omission that caused difficulties for all parties?

Mariners use the phrase, "If you bought it, a ship brought it". That is indicative of the importance of our ports in facilitating the activities of exporters. However, I wish to raise an issue that is of particular interest to my party and to the International Transport Workers Federation. Does Mr. Whelan consider it a cause for concern that the goods which go to make up the €150 billion or €160 billion of trade in which we are engaged may be brought back and forth to this country in ships where staff work in desperate conditions under flags of convenience? We have tried on many occasions in the Dáil to have flags of convenience outlawed and to expand the Irish shipping register. The delegates are talking about cutting costs, but should our costs be cut on the backs of hard pressed mariners, from Ireland and elsewhere, who work under shocking conditions? Is this not shameful?

Mr. Howard Knott

If the situation were definitively as the Deputy has stated, it certainly would be a cause for shame. There has been great controversy about the flagging of vessels and the replacement of existing personnel with lower-cost agency personnel. It is something that will inevitably happen if one is to be competitive on a global level. Ireland is probably more exposed in this regard than most other European countries because, as Deputy Broughan, observed, most goods available in this State have been brought here by sea. However, recent evidence shows, from talking with people working on board vessels which come to and from Ireland, that the newest vessels are much more sophisticated, the technology on board is at a much higher level and the general standards of competence required of crew and masters are higher than was the case in the past. In Cork, for example, the National Maritime College of Ireland was set up jointly between Cork Institute of Technology and the Naval Service to train mariners and officers to a high level.

Deputy Thomas P. Broughan

Would the Irish Exporters Association support the ending of flags of convenience?

Mr. John Whelan

While we are not supportive of flags of convenience, we do not perceive this issue as something for which we should lobby. It is an international marketing scenario and features other than those pertaining to labour are associated with flags of convenience. At the launch last month of our study, Trade and Transport Analysis 2008, we led with the point that Ireland now is one of the top 15 centres for ship finance. While some ship financing issues also bring in flag issues, the position in respect of flags of convenience is relatively complicated and we are not, per se, in favour of them. However, we are attempting to attract high quality finance jobs associated with the maritime sector. We are an island nation and should be able to develop this further and places like the college in Cork mentioned by Mr. Knott constitute moves in that direction. It also is positive that the financial services centre is now involved in a high proportion of the international funding of ships. Unfortunately, like many manufacturing sectors, the regular seafarer has lost out in the push towards modernisation.

Deputy Michael Kennedy

I also welcome Mr. Whelan and Mr. Knott, whose presentation has been highly interesting. In the current economic downturn, we must concentrate on exports and must be cost-effective in respect of production and having an efficient shipping operation.

I refer to the Irish Exporters Association's liaison with different bodies. I am particularly disappointed it did not see fit to make a submission to Dublin City Council. As a Dublin North Deputy, I do not represent the Clontarf area. However, I do not believe the interests of some people in Clontarf should take precedence over the bigger national picture and what I regard to be the national interest.

While I accept to a degree the point made by Deputy Broughan that there may be other potential areas, at present Clontarf clearly has been identified as an area that can be developed in an efficient manner for the betterment of the country and for our export markets. As a body, I would have thought the Irish Exporters Association should be vocal on this issue as at present, only those who are opposed to it, such as the public representatives and the organisations that have been set up in Clontarf, are being vocal in this regard. While I recognise their democratic right to fight for a cause if they believe it to be correct, I see a bigger picture.

I make a similar point regarding the eastern bypass. When the local elections of 1991 took place, it became an election issue and went off the political agenda. Now however, everyone is aware that on foot of the opening of the port tunnel and construction of three lanes on the M50, the existence of the eastern bypass would resolve major traffic problems facing Dublin city and county and would enable ports like Rosslare to prosper. Why has the Irish Exporters Association not been more vocal in this regard?

As for Bremore, which is located in my constituency of Dublin North, what liaison is taking place between the Irish Exporters Association and the National Roads Authority? As my colleague, Deputy O'Dowd noted earlier, there is a clear need first to develop a separate road from the M1 directly to the new port. One cannot have traffic traversing through housing estates in what I am sure the witnesses are aware is the densely populated area of north-west Balbriggan. Anyone who turns off the M1 to go into Balbriggan will see what I am talking about. As this area comprises high density housing, a separate road off the M1 is clearly required. With the development of the proposed outer ring road from Drogheda to Naas, this project would service the entire country.

What is the Irish Exporters Association doing to make its voice heard to bring about such developments? The M50 motorway is being upgraded to have three-lane carriageways and the completed section is a great piece of infrastructure. Has the Irish Exporters Association called on the authorities to add a third lane in both directions on the M1 motorway? Clearly, this will be needed in the event of major tonnage passing through Bremore as the existing two-lane carriageways are taken up with commuting motorists every day.

I also wish to raise the issue of rail versus road links. As the vast majority of exporters are not on a rail link, proportionately speaking they will opt to use roads, in the initial phase at least, while driving to their nearest rail link. While all members will agree a target of 10% rail usage would be desirable, is this economically sustainable if the costs of rail carriages and other issues are compared? Do the witnesses consider that more than 10% would be required to make it economically viable? I note Mr. Knott's comment to the effect that a freight company in the United Kingdom has operated a private rail operation as part of its transit operations. However, the United Kingdom is 50 times the size of Ireland and has 50 times the number of rail links. Should Ireland be driving this issue?

Chairman

Okay——

Deputy Michael Kennedy

I have a few more questions to ask, having listened patiently to those posed by the Chairman and others.

Chairman

That is not a problem.

Deputy Michael Kennedy

I refer to Mr. Knott's comment that the Irish Exporters Association perceives a need for Dublin Port to continue operations, together with the new port at Bremore. Do the witnesses have a view on what traffic Bremore should take on and what traffic Dublin Port should lose? From a competition perspective, it is in the interest of both the country and exporters to have two separate ports. One would not wish to see a scenario in 20 years' time in which Dublin Port has closed down to become a Manhattan or whatever and one has wound up with a single major port at Bremore. The concept of having two ports competing against each other for traffic will be good for our export sector.

Mr. John Whelan

I will respond to some of Deputy Kennedy's general questions on lobbying and some of our views thereon. I will ask Mr. Knott to respond on the rail issue. On the lobbying front, typically we make detailed significant submissions and do so continually. For example, we did so in respect of the National Development Plan 2006-2013. Similarly, we make pre-budget submissions every year and always include a section on infrastructure, in which we go into this issue in fair detail. At present, a Department of Transport-commissioned study on Dublin Port is under way. Consultants from Indecon have been appointed and have spent much time with us in their efforts to develop the report for the Department. They go back and forward on a daily basis. Moreover, the Department of the Environment, Heritage and Local Government has a separate study under way on the environmental aspects of the port and obviously we have an interface in this regard. In some instances we make detailed written submissions, while in others we simply meet the appointed consultants and work with them to ensure they have a fuller picture. We also often bring them into touch with individual companies that are major users.

Depending on the issues, we lobby Departments other than the Department of Transport. We also regularly meet representatives of the Departments of Enterprise, Trade and Employment, Foreign Affairs and so on, depending on the international issues we are trying to push across. It is not that we do not have an opinion. We are in agreement on some of the manoeuvres but can only focus on so much.

We have consistently welcomed the development at Bremore and, in particular, the fact that it has proved possible to obtain sufficient financing to provide a competitor port. Given previous national and international developments, it takes a long time for ports to get up to speed in terms of environmental impact statements, planning permission, the acquisition of supporting land, warehouses, cranes, dredging equipment and so on. For this reason, we should not restrict the development of Dublin Port while we await developments at Bremore. Dublin Port must do its best to keep Ireland and its exporters competitive in the short term. In the medium to long term Bremore will, I hope, act as a competitor port offering additional options. Volume figures continue to grow and in the next decade Bremore will be a thriving port offering good, competitive services to exporters.

I ask Mr. Knott to address the issue of rail freight.

Mr. Howard Knott

As Deputy O'Dowd stated, the outer ring road is vital for Bremore Port. The spur from the rail line is equally vital. It should be a rail-connected port from day one. A significant volume of its container and bulk traffic should be transported by rail. There is no physical reason this could not be done. The issues tie up well.

Given current technology and the way in which trains operate, a minimum or maximum volume is not necessary to make a rail freight operation run effectively. When the first operations started 30 years ago, enormous cranes to lift containers cost a fortune. Everything, including yards, was large and expensive. Forklift trucks have morphed into substantial pieces of equipment. A one-man piece of equipment worth €100,000 can lift containers from trains to trucks, ships or the ground. Technology has advanced considerably and costs have decreased rapidly. There is no initial interest in considering a rail service composed of anything other than fully chartered trains. We will not go back to the old days when one container was placed on a train and a second on another. The current position is like the example we gave of the DFDS service from Waterford.

On the container side, we could double or treble current volumes and hardly notice in terms of the costs involved. Everyone who has discussed the matter with the Irish Exporters Association has stated cost is not the main issue. It is reckoned that the costs in respect of current train services would be okay. It is not a question of driving them down further.

It is all to play for. We should not make a significant issue out of the difficulties. As the Chairman stated, we need to push those involved in the rail system to facilitate the forthcoming operation.

Mr. John Whelan

To revert to the points made by Deputy Kennedy, the large consultancy group Booz Allen Hamilton completed a report on rail freight for the Department of Transport three years ago. It estimated the social cost — road transportation, environmental impact and so on — of letting the rail freight sector die which has since occurred. Given that it did a such detailed job, reviewing the report would be worthwhile.

Chairman

To which report is Mr. Whelan referring?

Mr. John Whelan

The strategic rail freight report by Booz Allen Hamilton.

Chairman

How long ago was it compiled?

Mr. John Whelan

Approximately five years ago.

Deputy Paul Connaughton

It was not complimentary.

Mr. John Whelan

No, but it clearly identified the social costs involved. If I remember correctly, the amount was €60 million per annum. That figure will have increased because the cost to the State of not meeting environmental impacts has increased, but it is a good example of how to measure social costs.

Deputy Paul Connaughton

I apologise for missing the presentation; I was speaking in the Dáil. I will not delay the meeting, as I am sure our guests have addressed my question ten times already. The Chairman and the committee were invited to Dublin Port to consider its extension. Will it go ahead?

Mr. John Whelan

It is ready and, effectively, a recovered area. All it needs is some tarmacadam, but that cannot be done without planning permission which it cannot have because it has not been issued with a foreshore licence for the recovered land. Dublin City Council will not issue planning permission on these grounds, a daft situation in which we have been caught for ten years.

Deputy Paul Connaughton

Will it happen?

Mr. John Whelan

It should, but whether it will is another question.

Mr. Howard Knott

I have a related point to make. The extension is essential to drive costs down because it would allow larger ships to move in and out of the port. The largest container vessel operating in Dublin Port can take the equivalent of 1,000 containers, but shipping lines have vessels that are smaller or larger. They are forced to use smaller, more expensive ships or larger ships only half loaded. Either way, someone sitting in a shipping line's head office in Geneva would not find attractive the idea of running such a constrained service to an Irish port. It would be more interesting to run a service from Rotterdam to Riga or elsewhere in the Baltic Sea. We must be aware that shipping is an internationally competitive business and for many lines Ireland is no great catch. We must compete in kind.

Chairman

To return to my previous question, would better logistics improve the position? Would it be possible to import and export more products through Waterford, Rosslare, Cork and Foynes harbours than through Dublin Port?

Mr. John Whelan

The difficulty is that the smaller ports would have to be heavily funded by the State to reach that level.

Chairman

Surely Foynes or Cork harbour could attract such a level.

Mr. John Whelan

The Chairman referred to Galway harbour which will never be at that level. Foynes harbour has the potential to do so but the difficulty is that it is facing away from most of our traffic. If we could get a US shipping line interested, it would be facing in the right direction. Then the major issue would be its isolated location, given that the rail connection with Limerick has been closed, because of which it has already lost business in Limerick. Askeaton is the worldwide centre for Wyeth's food nutritionals. It closed down its US operation and transferred its management and manufacturing operations to Limerick where in regard to distribution it had the rail head designated as a customs port, an inland port point, where everything was cleared. However, Iarnród Éireann closed it down and Wyeth had to change some of its distribution arrangements. Some was lost to the United Kingdom but the operation in Askeaton is still a key employer. It is the worldwide centre for baby food and nutritionals. There is a huge market in China, the fastest growing baby food market. The company tried Shannon Foynes port to distribute some of its goods but this did not work out because the port was not up to standard. More investment is required to meet the standards set. In the meantime, the company is reliant on Cork Port which is also in difficulty. One major plant is at risk.

Chairman

Will Mr. Whelan revert to us with details of the companies involved and the tonnage that could be moved by rail if an adequate rail system was in place? Would it be realistic to provide rail services for Wyeth? Has it gone too far in terms of investment?

Mr. Whelan is not answering my question. I thought capacity at Cork, Waterford and Foynes harbours was such that there was room for expansion. The road network is being improved — there is the Atlantic corridor, the tunnel in Limerick, the move to Ringaskiddy and so on. Surely there is potential to increase the volume of traffic using these three ports.

Mr. John Whelan

If one goes back approximately 15 years, Waterford harbour had a much greater share of container freight traffic out of Ireland. Dublin Port has grown its percentage, not because it has offered better rates but because the shipping lines wanted to use it. When there are two lines operating, if a truck misses the first, it can get the second. Logistics operators and shipping exporters can guarantee certain delivery times. We talk about creating clusters; in this case a natural cluster developed around Dublin Port. Waterford Harbour failed to create such a natural cluster. It is a question of dynamics. One does not want to fool around and try to restrict Dublin Port because the international game does not care which port freight traffic goes through. It is going through Dublin Port which has the required facilities and is seen to be efficient.

Mr. Howard Knott

Part of the reason Waterford Harbour has failed is that the rail system was taken apart. Cork Harbour has succeeded and multinational companies are operating in the area. There is a good and satisfactory range of services to continental Europe and volumes are increasing.

Chairman

Mr. Knott seems to be wiping out Galway Harbour.

Mr. Howard Knott

Galway Harbour was being taken apart for the benefit of the Volvo Ocean Race, provided some of the boats survived long enough to reach it.

Chairman

There is a proposal to invest €300 million in a deep water harbour in Galway Bay.

Mr. Howard Knott

At Rossaveal.

Chairman

In Galway Harbour, in the tidal area, although Rossaveal might be the right place to locate it. Is that a good idea?

Mr. Howard Knott

This is linked to what we have been talking about all afternoon. If one has an efficient internal distribution system in Ireland for transferring goods from ports, one does not need all of the ports mentioned. There could be a smaller number of bigger, more effective ports. As ships become bigger, it becomes more and more difficult to justify building new ports, except where there are large population volumes. My personal view which I have not discussed with Mr. Whelan is that there is not space for a port in Galway if a serious development is being considered in the Limerick and Foynes area and if, moving in the other direction, there are resources available in Killybegs for trade development.

Regarding a rail link with Foynes and its ability to attract to attract goods, there was a specific instance last year where a line started to operate from the West Indies to Ireland and on to other destinations elsewhere in Europe. It mainly carried bananas and Fyffes was involved. Foynes was a logical place to which come because it had water of the required depth and everything else but it did not work out. The line came to Dublin where the infrastructure was more effective. A ship could be unloaded and the goods delivered to the customer more easily and it was closer to distribution centres. Even though the geography was right for Foynes, it did not have the required volume.

Chairman

What was the problem at Foynes? Could ships not be unloaded quickly enough or adequately?

Mr. Howard Knott

That was the problem. There is very sophisticated container handling equipment in Dublin; there is not the same level of sophistication at Foynes. These are refrigerated containers which are critical in the transport of bananas. When one buys bananas in a shop, one is very choosy. Foynes Port did not have this equipment in place, nor did it have a rail system. If it had, the goods could have put on a train which would have departed immediately.

An issue we have not mentioned but which is interesting is that one could have what are considered to be inland ports. One could have such a port in Portlaoise. I write a column in a freight transport magazine and facetiously call it "Cowen port" but we will pass over this. The idea is that one would transport cargo in containers from Waterford or Dublin by train to Portlaoise where it would be disassembled and distributed, making Portlaoise the central transport hub, rather than having freight transport passing through a city such as Dublin which is for people, not freight.

Deputy Paul Connaughton

Would there be a question of double handling in that case?

Mr. Howard Knott

Yes. Many containers arrive at a distribution centre, are stripped out and reloaded onto other vehicles. Bringing in furniture for Woodie's, for example, involves bringing a container to a distribution centre where it is offloaded and reloaded onto vehicles which travel to various Woodie's stores.

Chairman

Is that possibility being realistically examined?

Mr. John Whelan

Laois County Council and the county manager have made a major effort and made various submissions to us on the matter. Part of it hinged on a rail connection and on getting Revenue to grant inland ports custom status and allocate an inspector to clear any obstacles. The demise of the rail freight sector has killed it.

Chairman

I thank Mr. Whelan for his presentation and would appreciate it if he would forward the information requested by the committee. We will return in private session at approximately 6 p.m. for a discussion with Mr. Molloy on taxi regulation.

The joint committee adjourned at 5.50 p.m. until 3.45 p.m. on Wednesday, 3 December 2008.