I thank the Chairman and members for the inviting us to address them regarding their review of the ports sector in Ireland. My colleagues are Mr. Michael Sheary and Mr. Seamus McLoughlin.
Dublin Port Company is a self-financing, private limited company wholly owned by the State. The company's business is to manage Dublin Port, which is Ireland's premier port and a key element of our national strategic infrastructure. As critical infrastructure, the operations of Dublin Port are of national and regional significance in terms of achieving a competitive, dynamic and efficient economy. Dublin Port plays a pivotal role in facilitating trade in the State and handles 41.4% of total Irish seaport trade. The majority of the unitised goods imported through Dublin Port are time-dependent consumer products which are purchased.
The company traces its origins to 1786, when the Corporation for Preserving and Improving the Port of Dublin was established. It was reconstituted as Dublin Port and Docks Board in 1867. Dublin Port Company was established as a corporate entity in 1997 and is responsible for the management, control, operation and development of Dublin Port. The company is controlled by a board of directors appointed by the Minister for Transport. It is the company's statutory duty under the Harbours Acts 1996 and 2009 to ensure the provision of adequate facilities for ships, goods and passengers in Dublin Port. In pursuit of this duty, Dublin Port Company provides world-class facilities, services, accommodation and land in the harbour for ships, goods and passengers. Unlike other aspects of strategic national transport infrastructure such as Dublin Airport, Dublin Port plays a critical role in the national economy not only in the movement of people but as a facilitator of trade in goods. Dublin Port Company operates the sixth largest roll on-roll off port in Europe and is a profitable, successful and efficient commercial company which pays dividends to the State as its shareholder. In addition, it makes a significant contribution to the national and regional economy in taxes, dividends, city rates and employment.
It may be helpful if I give a broad outline of trading activities at the port. Dublin Port provides a range of facilities dealing with many different types of cargo and including: lo-lo terminals; ro-ro terminals; cruise ship facilities; passenger and car ferry terminals; dry bulk loading, unloading and storage areas; liquid bulk, including oil and fuels, jetties and terminals; break bulk facilities; and leased and licensed sites for backup and port-related activities.
Dublin Port Company does not provide stevedoring services directly but licenses a number of competing terminal operators to operate in the port. This model, which is unique in Ireland, has ensured competition within Dublin Port among rival operators and encouraged competition with other ports on the island. Dublin Port Company's charges to our unitised customers are 10% lower than 20 years ago and have not been increased in the meantime.
Located in the heart of Dublin city and at the hub of the national road and rail network, the port is a key strategic access point. The Dublin area is itself responsible for almost half the nation's GDP. Dublin Port is a transport hub and is strategically located in terms of access to necessary road and rail infrastructure, as envisaged by Transport 21. Dublin Port is the only port that is truly connected to the national rail network and it is strategically linked to the Dublin Port tunnel, which leads directly to the M1 and M50 motorways.
Dublin Port has significant natural attributes. Unlike some other east coast ports, it is open in all weather conditions. It is located at the centre of Dublin city and the heart of the economy. It connects the two most important economic areas in Ireland and Britain, that is, the Dublin region and the Manchester-London corridor. It facilitates the arrival of cruise liners and passenger ferries with a total passenger footfall of 1.3 million. Cruise passengers alone contribute between €35 million and €50 million to the regional economy. These natural attributes and locational advantages are supported by strategic infrastructure such as rail links to and within the Dublin Port complex which directly connect the port to all major population centres in the country, the Dublin Port Tunnel and Transport 21, the main thrust of which is to upgrade the national road and rail networks. Dublin Port is located at the hub of both the rail and road networks and not merely at the end of a railway or motorway. Accordingly, Dublin Port is well positioned to continue to cater for the recovery, growth and expansion of our economy and the resulting movement of goods, as it has been doing for millennia.
Given that trade will be carried by larger and more efficient ships and international indications that the up-sizing of vessels is continuing apace, it is critical that we have the strategic port infrastructure and deep water facilities in place to service these vessels in advance of their appearance. Otherwise, we will be confined to servicing smaller and less efficient vessels, which will ultimately result in higher freight costs. This will have cost and competitive consequences for the economy and consumers. We must plan ahead for the strategic needs of the future rather than play catch-up because of a failure to anticipate and address international developments in trade and logistics. It is in this context that we have advanced the Dublin gateway project, which is currently before An Bord Pleanála.
Irish ports must play an ever-increasing role in facilitating the economy to recover especially in respect of exports, which have grown 2% in value terms in the first half of 2009. Dublin Port is by far the largest, most efficient and best connected port on the island and accounts for more than €35 billion in trade in 2008 value terms. It is a key part of our national strategic infrastructure and in trade terms a critical gateway to our trading partners. Failure to address and anticipate the effectiveness and efficiency requirements of Dublin Port will result in economic damage, missed opportunities for recovery and greater pollution. If less efficient locations are used to feed the city of Dublin, we will incur greater internal and external costs for the economy.
Looking to the future, demand in Dublin port is likely to rise sooner than in other Irish ports in the second half of 2009. For example, a new service into Dublin will increase the annual throughput next year by more than 10% in ro-ro. Dublin Port has maintained market share in tradeable goods since the downturn.
Since its incorporation in March 1997, Dublin Port Company has consistently delivered profits which have resulted in an accumulated profit and loss account reserve on the company balance sheet in excess of €207 million by 31 December 2008. Turnover in 2008 was more than €70 million, delivering an operating profit of €27 million and earnings before interest, tax, depreciation and amortisation — EBITDA — of €33 million.
In the 12 year period from corporatisation to December 2008, Dublin Port Company financed capital and infrastructural developments totalling €254 million. In addition, over the same period, the company contributed more than €236 million to its pension fund. As such, the company paid pensions out of current income rather than through a formal fund. This level of funding and investment, which at the end of 2008 amounted to almost €500 million, has been fully met by the company without recourse to Exchequer funding. The strength of the company's core business and operating cash flows is evidenced by the fact that this funding has been achieved chiefly through its own resources, with bank borrowings amounting to only €36 million at the end of 2008.
Dublin Port Company's success in meeting the requirement of the ports policy statement for the delivery of efficiencies and ensuring the company continues to contribute to national competitiveness has also been clearly demonstrated. In this regard, Dublin Port Company has led the way in developing the competitive model pursued at Dublin Port where ten competing operators currently utilise eight terminals across the ro-ro and lo-lo modes that make up the unitised sector. This constitutes almost 80% of total throughput in Dublin Port. In 1990, one ro-ro terminal operated out of the port providing services to two operators. The modernisation of the port since 1992 has been central to ensuring the port was able to facilitate an almost fivefold increase in trade in the intervening period, from 6 million tonnes in 1992 to 29 million tonnes in 2008.
Importers and exporters have choice and flexibility in how they manage their transport requirements within the complex logistics chains that underpin the economy's ability to trade. Competition also ensures that value for money is at the centre of their decision making processes. Notwithstanding the current downturn, Dublin Port Company will continue to generate operating profits in excess of €21 million per annum. In addition, the company policy of returning a dividend to the State amounting to 20% to 30% of profit after tax, excluding exceptional items, will continue to be adhered to. In this regard, Dublin Port Company is the first and only State-owned port company to return a dividend to the State.
I am also pleased to confirm to the joint committee that the board of Dublin Port Company has recently endorsed the key recommendation of the Indecon report into Dublin Port, published recently by the Department of Transport. In particular, the board has formally endorsed the key conclusion of the report which found, after a detailed cost-benefit analysis of seven different scenarios, that the retention of Dublin Port in its present location, together with on-site expansion, would deliver the highest net present value in cost-benefit terms. The certainty provided by the Indecon report is welcomed.
The letter inviting Dublin Port Company to appear before the joint committee outlined some areas on which we may wish to present our views concerning the constraints imposed on developing the port and expansion of trade. The letter also suggested that we may wish to highlight areas where there is an absence of joined up thinking or policies affecting the port's performance. I will be pleased to address these issues in the open discussion that follows this presentation.
The critical role played by the ports does not receive adequate recognition. The ports are an element of national infrastructure that has tended not to have been prioritised or addressed in any strategic sense. For example, until recently some people tended to consider land at Dublin Port in terms of its building development potential and not in terms of the critical function the port plays in the national economy. Sadly, this view still prevails among some officials and planners in Dublin City Council who have a long-term vision to move the port to another unspecified green field site and allow the port lands to be developed with shops, apartments and offices. Thankfully, the Indecon report has shown the folly of a focus which values the port purely as a property play rather than critical national economic infrastructure.
I am also concerned that there is a lack of cohesion among some of the statutory authorities on the issue of port expansion. For 20 years, Dublin Port was caught in a bind between Dublin City Council and the Department with responsibility for marine in our attempts to lodge a planning application for new port space. The Department would not grant a foreshore licence until we had planning consent and the council would not entertain a planning application until we had a foreshore licence. Thankfully, the enactment of the Planning and Development (Strategic Infrastructure) Act allowed us to have our port expansion plans at least assessed from a planning perspective. The application is currently before An Bord Pleanála at oral hearing.
I would be pleased to answer any questions members may have on Dublin Port and Dublin Port Company. I extend an invitation to members of the joint committee to visit the port to see our operations at first hand.
