WOULD THE ADOPTION OF THE EU ‘PORT SERVICES’ DIRECTIVE

BENEFIT GREEK PORTS? A VIEW FROM WITHIN

Athanasios A. PALLIS Department of Shipping, Trade and Transport, University of the Aegean, Greece

2 Korai St, Chios 82 100, Greece.

Tel. +30-22710-35275. Fax: +30-22710-35299. E-mail: apallis@stt.aegean.gr

&

George K. VAGGELAS Department of Shipping, Trade and Transport, University of the Aegean, Greece

2 Korai St, Chios 82 100, Greece.

Tel. +30-22710-35275. Fax: +30-22710-35299. E-mail: gvaggelas@mycosmos.gr

Abstract

This paper examines what would be the impact of the implementation of the freedom of

entry and provision of port services in Greek ports. The paper analyses the responses of

CEOs who manage Greek ports to a questionnaire focusing on whether the EU failure to

endorse a „port services‟ directive regarding free access to the port services market works

in favour of Greek ports. By linking the results to the existing literature on port

competitiveness, the paper conceptualises why Greek port authorities, which have not

implemented any organisational restructuring because of limitations in national port

policies, endorse a positive approach in response to the aims, though not the details, of the

proposed directive. The conclusion is that the adoption of a EU regulatory framework,

with due account to the particular local characteristics, would reinforce the quality of

services provided in Greek ports and advance an essential operating restructuring.

2

WOULD THE ADOPTION OF THE EU ‘PORT SERVICES’ DIRECTIVE

BENEFIT GREEK PORTS? A VIEW FROM WITHIN

1. Introduction

The last three years the European Union (EU) debated the potential of implementing the

freedom of entry and provision of services in all European ports. However, the European

Commission‟s proposal for a „port services‟ directive (CEU, 2001) was proved to be

remarkably controversial. Aspects of the potential regimes governing pilotage, self-

handling of cargoes, the transparency of financial relations, and the authorisation process

to service providers, have been among the most disputed issues. In November 2003 the

European Parliament (EP) rejected a compromised proposal and the legislative procedure

was closed (temporarily?) with no result.

The adoption of this directive would have a profound structural effect on the Greek port

system. This system has been dominated by the Latin tradition of state-owned

comprehensive port organisations. A reform of the national port policy towards port

devolution has been under way since 2000. The twelve Greek ports of national interest

have transformed to state controlled autonomous companies. Still, there is no element of

intra-port competition as port authorities retain the monopoly of port services provision.

This paper examines whether the preceded EU „policy output failure‟ works in favour of

Greek ports. It does so by analysing the results of a research that has been conducted with

the participation of the Chief Executive Officers (CEOs) of the Greek ports of national

interest. These key-players have responded to a questionnaire regarding:

(a) The general implications that the directive would have;

(b) Whether the suggested alterations of the state aids regime would be helpful;

(c) The impact of free market access on specific port policy areas;

(d) The essential conditions of opening market access; and

(e) Financial port accounts transparency.

The questionnaire design has benefited by a similar exercise that took place in the UK as

part of a consultation process involving stakeholders (DoT, 2002).

If adopted, the directive (Section 2) would have a direct effect on eight Greek ports

(Section 3). At the same time, it would have modified the whole competitive

environment, i.e. by providing the potential of a Greek port authority/company to offer

services in more than one port. The research sought for responses to the questionnaire by

those responsible in the management of all these twelve ports. The responses and

comments (structured interviews) given by ten of them provide an accurate picture of

what would be the implications of the specific initiative, and help to conclude on whether

Greek ports have been losers or winners from the lack of policy output (Section 4).

The paper concludes on the costs and benefits that the EU directive would result in. By

linking the results to the existing literature (Section 5), it conceptualises the

characteristics and the structure that Greek ports need to develop. It also provides an

assessment on whether the critical views expressed regarding the potential disturbing

structural changes in the European ports are justifiable in the Greek case, or the Greek

port sector should be considered as losers of the absence of a EU legislative outcome.

This analysis is particularly important in the light of a new (January 2004) Commission

3

proposal for a Directive aimed to create an Internal Market in services (CEU, 2004).

European port authorities access that, by establishing a regulatory framework that will

affect a wide range of services, this directive will introduce the potential to bring in free

market access to port services „behind the back door‟ (ESPO, 2004).

2. The would-be ‘port services’ Directive

Since the early 1990s, EU institutions have been active in reinforcing quality in port

services and in creating a „level playing field‟ between and within EU ports (Chlomoudis

& Pallis, 2002). The 1997 Green Paper (CEU, 1997) launched a debate on possible port

policies aimed at increasing efficiency and improving maritime infrastructure. Amongst

other issues, the Commission advocated the need for open access to the market for port

services in the main ports with international traffic.

To meet those aspirations, the Commission proposed a „port services‟ directive (CEU,

2001). This initiative sought to establish common rules for the implementation of the

freedom to provide port services; authorisation for port service provision; limiting the

number of port service providers; self handling; duration of individual authorisations; and

procedures to be followed. A far-reaching objective was the existence of at least two

providers for every port service of three categories. Firstly, techno-navigational services

regarding: (a) pilotage, (b) towage, and (c) mooring. Secondly, cargo-handling services

including: (a) stevedoring, stowage, transhipment, and other intra-terminal transport, (b)

storage, depot, and warehousing, depending on cargo categories, and (c) cargo

consolidation. Thirdly, passenger services, including embarkation and disembarkation.

Member states would be granted the rights to authorisation for services provision and

definition of the relevant permit duration, in order to ensure proper management and a

satisfactory level of services. They would also retain the right to limit the number of

providers for reasons of capacity or safety. This would be subject to a transparent,

objective and non-discriminatory process concerning exclusively the professional and

financial qualifications of the provider, insurance coverage, safety, port facilities,

equipment, personnel, and environmental protection. A public service could also be

advocated on the grounds of safety, continuity, quality, and price. A further provision was

dealing with the right to self-handling: When no contract has been signed with a third

party for the provision of the said services, this right should be subject to an authorisation

for which the criteria must not be stricter than those applying to providers of the same or a

comparable port service.

Finally, the Commission proposal defined the rights and obligations of port managing

bodies in their dual functions of authority and service provider. Where the managing body

provides, or wishes to provide, port services in competition with other service providers,

it must be treated like a competitor. The managing body should also separate port service

accounts from its other activities.

3. The Greek Port System

The operational framework of Greek ports is marked by a predominant role of state

authorities as regulators and a public sector responsible for the direct management and

provision of services. Greek ports have responded to the comprehensive ports

4

organisation model. The port authority owns and maintains port infrastructure and, at the

same time, provides (almost) all the port services. There is only one and exclusive

provider of each service in each port. This is either the port authority itself or the

federations of port-workers, with the private sector involved in the provision of these

services solely in the cases that port authorities lack the equipment to provide them (i.e.

handling cranes). The adoption of the directive would alter these operational and

organisational structures.

A restructure of the national port policy has been under way since 2000. The pattern of

regulatory change is the transfer of function and responsibility from central government

to commercially driven public entities („port devolution‟ - Baltazar & Brooks, 2001). The

strategy to build a financially self-sustaining autonomous national port system matches to

a considerable degree changes that had taken place in other Mediterranean EU member

states (i.e. Italy, Spain) in the 1990s. The two major trans-European port organisations,

(Piraeus and Thessaloniki), are currently listed in the Athens Stock Exchange, though the

state retains the management and owes 75% of the shares. Ten other ports of national

interest (listed in Table 1) have been transformed to limited companies whilst there is just

one share owned be the state. The aim is to generate a degree of autonomy, whilst a

special governmental secretariat, created in 2001, administers the whole national port

system. Public control remains, and all Greek ports are under the supervision of the

Ministry of Mercantile Marine. The first attempts by a private company to offer port

services, i.e. to operate a (car) terminal, have been blocked (September 2003) as illegal.

Table 1: Traffic in the Twelve Greek Ports of National Interest (2002).

Port

Goods

Throughput

(in tonnes)

Passenger

Traffic

(in persons)

Cars

Loaded/Unloaded

(in No)

Sea-going

Vessels

(in No)

Piraeus 17.715.584 11.797.856 321.455 27.902

Thessaloniki 14.197.280 192.945 48.340 3.224

Heraklion 3.055.000 1.822.072 187.001 3.100

Patra 2.831.492 1.355.350 552.595 81.581

Elefsina 2.666.300 665.000 283.160 5.046

Kavala* 1.842.686 1.470.717 363.808 7.330

Volos 1.161.332 369.042 58.484 1.050

Igoumenitsa** 434.881 1.192.945 434.013 14.281

Rafina 65.000 1.760.776 301.117 4.305

Corfu 37.752 2.146.179 463.747 9.899

Alexandroupoli 549.950 159.452 31.513 2518

Lavrio** 49.656 213.412 63.317 1.815

Total of the 12 National Ports 44.606.913 23.145.746 3.108.550 162.051

* 2001 Data; ** Data 2000;

Source: Hellenic Ports Association, 2003 and Port Authorities web sites.

As Table 1 illustrates, over 160.000 sea-going vessels visit these twelve ports annually,

with a total annual throughput of 44,6 million tonnes and 23,1 million persons (71% and

70% of the total throughput passenger traffic in Greek ports respectively). The proposed

directive would have applied to any EU port, provided that its average annual throughput

over the last 3 years has not been less than 3 million tonnes or 500.000 passenger

movements. In cases of ports reaching the freight traffic threshold without reaching the

corresponding passenger movement threshold, the provisions of the Directive would not

have been applicable to port services reserved exclusively for passengers, and vice versa.

5

This means that, if adopted, the directive would have had an immediate effect in the

provision of port services in eight Greek ports (Piraeus Thessaloniki, Elefsina, Patras,

Igoumenitsa, Iraklion, Rafina, Corfu). Still, it would change the operating regime and

ultimately alter comprehensively the structure of the whole port system in Greece.

4. Assessing the Potential Implementation of the Directive in Greece

4.1 General implications of the Policy Initiative

The vast majority of the Greek port CEOs has been positive vis-à-vis the scope of

opening market access and welcomed in principle the specific policy initiative. One CEO

offered a conditional support, because „such proposal should have taken into account the

peculiarities of the Greek port system‟. A further issue stressed was the need of a

regulatory framework that details the total of the services to be offered in a port before

detailing the market to be exposed in competition. The director of a port that provides

almost exclusively passenger services expressed the only negative view vis-à-vis the

proposal. His justification was that market opening would increase the costs of coastal

shipping, so that certain shipping companies would withdraw their services.

One third of the responses named „cost reduction‟ and the „rationalisation of pricing

policies‟ as the main positive effects of such change. Foremost, the establishment of

competition is considered as a mean to reduce excessive labour costs. The improvement

of the existing legal framework, the advancement of a comprehensive organisational

reform of “a national port system stacked in the principles of the 1970s”, and the need to

develop the transparency of the state aids regime, have been further justifications for

supporting the aims of the directive. Not least, it was argued, because the new framework

would ultimately result in better additional services in the major Greek ports in better

quality services, and the comprehensive integration of Greek ports in European transport

chains. All these are benefits to be felt by all port users, whether they are passengers or

freight customers.

As regards the potential negative effects, seven responses had a reference to the twofold

impact of the initiative on port workers. The future of the existing unskilled port workers

would be at stake, as in conditions of increasing port and intra-port competition, labour

flexibility and the decrease of the labour costs turn to vital issues. Currently, the legal

framework does not allow for redundancies in the public sector and ports are overstaffed.

At the same time, the absence of appropriately trained personnel would be a major

problem in the first years of the directive‟s implementation. The demand of skilled labour

was expected increase due to strategies towards quality services. Two CEOs suggested

that the best policy reaction to the regime change would be the path followed in Italy in

the 1980s: the state to assume specific responsibilities regarding port labour restructuring.

However, CEOs highlighted that in Greece, and at least at the moment, there is neither

any provision for re-training port workers and integrating technology usage in their core

skills, nor any mechanism for certifying port workers qualifications; meanwhile the

twelve Greek ports have realised this need and develop educational programmes

organised by the Hellenic Ports Association.

6

A second negative effect was associated with the fact that some public ports have already

invested in costly infrastructure, technologies and personnel training. The regime change

would result in the potential of new entrants to explore parts of this infrastructure or

labour force without compensating port authorities. The potential presence of cartels, or

oligopolies, in cargo handling, and the legal transition costs, were the other major

negative effects mentioned (two and one responses respectively). Additional minor costs

were expected due to the needs of (a) increasing safety and security provisions, (b) create

market-monitoring mechanisms, (c) standardise the procedures for market entrance and

operation, and (d) enhance transparency. Finally, one responder focused on the loss of

revenues due to the future lower prices of the services offered. However, it was argued

that all these costs could be counterbalanced by the expected major reductions of labour

costs and, not least, by the presence of a EU level-playing field.

The benefits for Greek port users, due to he increase of the number of services provided,

and the potential „to double‟ port authorities revenues stand as the major benefits of the

would-be regime. The four additional benefits mentioned are:

The enhancement of port authorities independence and autonomy to operate far from

central government interferences.

The provision of new and better quality services, due to the entrance of Greek ports in

new market niches and the arrival of global operators and stevedoring companies.

The implementation of competitive operation forms based on greater flexibility in

services provision due to the presence of competition and port authorities cooperation.

The mobilisation of private capital and of companies having state-of-the-art know-

how to offer competitive services.

4.2 The Details of the Commission’s Proposal

Turning to the details of the Commission‟s proposal, Greek CEOs were more critical

(Table 2). Whilst the majority believed that the initiative would remove restrictions, the

most critical views emphasised that market access is not a critical issue for all Greek

ports, or stressed the absence of capacity in order to achieve the essential restructuring

and re-organisation for the practical implementation of the proposal. Then, the common

belief was that the proposal would advance a systematic application of the free movement

of goods, persons, capital, and of the right of establishment in the EU. Yet, they

questioned any potential expansion to small or non-international ports that don‟t have the

potential to attract competitive services providers. Arguing against a widespread

application of the rule, one CEO associated the achievement of improvements to the

presence of quality control mechanisms that would assume the responsibility of

monitoring the operation of the market.

All CEOs, bar one, agreed that market access restrictions stand as a major problem in the

Greek case. The exclusive provision of services by port authorities; the offer of low-

quality highly-charged services, due to the monopolistic character of the market; the

regulatory restrictions in port pricing (only the port authority can detail prices according

to state guidelines); the resulting dissatisfaction of Greek port users; and the political

costs of reforming this issue at national level; were identified as main problems to be

effectively challenged by the directive. The complexity of such movement was associated

with the probable difficulties of passenger ports to secure essential coastal services of

public interest to/from Greek islands.

7

Table 2: Could the draft proposal fulfil its objectives?

To remove restrictions that hamper

access for potential service operators;

To improve the quality of service to port

users and help reduce costs;

To ensure a more systematic application

of Treaty rules;

Whilst not jeopardising environment or

safety?

Were these the appropriate objectives

It was also advocated that the impact of the directive would be substantially different in

the case of Greek ports (where the current legislation demands the exclusive service

provision by the port authority) when compared to other EU ports (which have already

substantial experiences insofar the implementation of regimes allowing for private port

operators). Besides, the institution of autonomous Greek port authorities is a

comparatively new development, with these authorities lacking both funds and

experiences of business-like operations. The directive would make available a

background for the establishment of a EU level-playing field without providing

guarantees for an immediate effect. The enhancement of such development would be

subject to the levels of capital attracted and the presence of competitive conditions. In any

case, it would be conditional to the local peculiarities (i.e. the Port of Piraeus is the

biggest cargo port in the area, but also the biggest passenger port connecting mainland

Greece with the islands) and the differences (i.e. size, geography, and markets) between

Greek and other EU ports. Therefore, they put forward the proposal for the establishment

of a European institution to monitor the cohesive implementation of the initiative.

The preceded differentiations have informed sceptical views regarding an immediate and

homogeneous implementation of a EU-wide directive. As did the lack of infrastructure

improvements in Greece, comparing to those observed in north European ports. In the

latter case, ports have already developed their infrastructure with the substantial

contribution of public funds and have already integrated these costs in port charges.

Hence they expressed their discontent with thoughts of allowing state financial

contribution to the industry only in emerging cases, rather than on a basis of specific EU

guidelines. As state aids regimes would change, CEOs worried that Greek ports would not

be able to enjoy similar contributions, and Greek ports would face a competitive

disadvantage. One CEO assessed this development as „catastrophic‟ for Greek ports,

whilst another stressed that „the nodes of the transport chain need substantial funds to

develop‟ Another CEO backed an exemption of Greek ports from EU state aids regime

that would accompany liberalisation. Advocating that it would be better to allow first a

real convergence to happen, responses focused on „the need for continuing public funding

of ports in peripheral EU regions for cohesion purposes, and for practical support of the

multimodal transport and short-sea shipping concepts.

This concern was also expressed in legal terms: EU policies do not impose ownership

structures. Even after the liberalisation of the port services, Greek ports would remain

public. The question that ought to be answered was „who‟ and „why‟ would restrict the

main (if not the only) shareholder (that is the state) to finance its „company‟ (i.e. the port).

55,5

66,6

66,6

55,5

66,6

44,4

11,1

33,3

11,1

11,1 11,1

22,2

11,1

11,1

22,2

0% 20% 40% 60% 80% 100%

Yes No Possible Neutral No opinion

8

A final issue mentioned was that port development is a precondition for the continuation

of public shipping services towards/from the Greek islands. Hence the state has an

intrinsic interest in continuing financing port infrastructures. In essence, there was a

united call for the continuation of the existing state aid regime, on the grounds of

promoting convergence between European ports infrastructures.

4.3 Impact on specific port policy areas

As regards specific policy issues, it was advocated that there would be neither significant

implications for health and safety, nor demands for further environmental protection.

Contrary to what observed in other European regions, such problems do not exist in the

case of Greece. Still, it was argued that the directive would result in the need for a

regulatory authority to monitor port operations. Five answers favoured the inclusion of

safety and environmental considerations in the list of limitations on the number of

providers in a port as: (a) their absence might result in the presence of „ports of

convenience‟; (b) such limitations already apply in several European ports, so their

inclusion in the directive is essential for establishing fair competition; (c) there are no

European level monitoring mechanisms; and (d) such limitations are pre-conditions for

sustainable development. Three CEOs argued that these considerations should be left to

port authorities, with one of them putting forward the proposal to monitor the

implementation of the directive for a certain period before deciding whether and how to

intervene in the market. There was just one stance against international rules. This was

because USA has favoured a strongest, am quite costly stance regarding security that

might result in substantial cost increases.

All Greek CEOs agreed that the presence of intra-port competition would have a positive

impact on quality, even though certain port services might be provided for an increased

cost. To them, all market players would enjoy the benefits, including port authorities

themselves. The only sceptical view underlined that providers might consider

concentrating on the more profitable port services, that is a strategy resulting in market

concentration and the limitation of the services provided in certain ports. Accepting that

market liberalisation is inevitable, this CEO argued that the state should find ways to

secure the provision of the widest range of services possible. Overall, it was estimated

that, following an initial period of intensive competitive pressures, the directive would

lead to remarkable increases in container traffic in Greek ports.

In the light of other EU initiatives (i.e. Marco Polo programme), and not least because of

labour reduction, CEOs believe that the directive would cause a systemic reform of Greek

ports. This is because the presence of private providers demands a rethinking of strategies

and organisational changes, along with a „positive-thinking‟ by trade unions. The drastic

transformation of the first period would be the transition from the comprehensive model

towards the landlord model. Then, it was argued, port authorities would need to detail a

strategy on whether they will act as landlord ports or compete along other providers of

port services. The majority of the CEOs claimed that depending on the ability to establish

competition and minimise phenomena of monopoly, the benefits would spill to the whole

Greek economy and will attract foreign direct investments.

Over two thirds of the questioned CEOs stated that the directive would have a positive

impact on the abilities of Greek ports to face their competitors in the EU. A more critical

thought asked for a reflection on the potential implications of an excessive competition

9

between Greek ports, and/or between ports located in the wider geographical region. This

scepticism followed the prospect of multinational port service providers (rather than port

authorities) dominating the market and determining competitive conditions.

Inconclusive has been the outcome regarding the impact on coastal maritime services of

public interest in Greece. Three answers focused on the positive impact of competition

towards lower prices of demanded port services. Due to the simultaneous limitation of the

existing subsidies offered by the Ministry of Mercantile Marine to shipowners, four

answers identified a „neutral‟ effect. One CEO argued that the directive would generate

difficulties for coastal shipping: it would contradict the national legislation (2932/1992)

regarding maritime services of public interest to and from certain islands, jeopardising the

provision of these services and, consequently, of social cohesion.

4.4 Market access governance and Competent authorities

The fourth set of questions examined the conditions that should govern the entrance of

private operators in the market of port services. Six CEOs believed that the Commission

had proposed the appropriate list of services to be covered. The most critical issue to the

rest were the conditions to govern pilotage, a service that according to their view should

remain a public task. Considering another disputed issue, namely shelf-handling, sceptical

responders focused on the need for all port service providers to be subject and comply

with EU/national legislation. Because of local peculiarities, the common view was that

port authorities should retain the role of the institution that certifies the qualification of

workers involved in cargo handling. Moreover, they expressed minor concerns regarding

the decrease of port revenues from port operations.

All Greek CEOs, bar one who remained focused on the reaction of trade unions, agreed

with the qualifying thresholds for service providers included in the would-be directive.

Two answers were accompanied by remarks regarding (a) the absence of specific quality

criteria; and (b) the need for a clear separation of the responsibilities that port authorities

and private port operators would assume following the regulatory reform. This separation

should be the threshold for controlling market entrance, allowing for competitive

conditions to exist and obliging services providers to respect environmental concerns.

Greek port authorities were remarkably divided on whether there should be thresholds for

each category of cargo handling, rather than for overall business. The major criterion for

three of them was that each cargo category demands specific transportation conditions;

hence threshold for each of them should apply. Within this framework the port authority

ought to be able to monitor each provider. For safety reasons, two responses asked for the

deployment of a coherent (rather than a „costly and ineffective‟ piecemeal) control of port

operations. The presence of economies of scale was another argument in favour of such

approach. A third option (put forward by two CEOs) argued that port authorities should

retain the authority to impose any thresholds, with decisions based on strategic planning.

Only two authorities endorsed the view that certain categories of cargo/facilities (i.e.

dangerous cargoes) should be excluded from free market access. The rest argued against

such exclusions, subject to personnel certification and quality control of entrance in the

market. Greek port authorities felt that private operators would appropriately control their

operation so there is no reason for such exclusion.

10

There was a unanimous though conditional reply in favour of delegating the role of the

competent authority to the port sector rather than this role should retained by central

government. The first condition was the close cooperation between port authorities and

any (independent or not) regulatory authority; the second one was the need of port

governance to remain part of central state planning.

However, CEOs were divided on whether there should exist an independent port

regulator. On the one hand, all of them recognised the need of a port regulator. On the

other hand, some remarked that a state secretariat exists since 2000, thus an additional

authority could create a confusion regarding responsibilities. Others mentioned the

contemporary efforts of port authorities themselves for association and development of

self-monitoring practices (i.e. they established the Hellenic Ports Association in 2003).

Conversely, any re-organisation of the regulatory authorities governing the national port

system should be part of a long-term plan. This is because the Greek port system is still in

its early period of autonomy and will need some time before maturing and exhibiting

conditions that will make the presence of an independent port regulator essential.

4.5 Conditions of the Port Services Market

Given the existing regulatory regime there is no Greek port authority that currently limits

the number of service providers. Two port authorities expressed the wish to limit the

number of providers in their port even if „free market access‟ is endorsed, for reasons of

(a) capacity and (b) reliability and quality standards imposed by the national port plan. All

others argued against limitations that would „disturb competitive conditions‟. Notably,

CEOs are aware of firms wishing to provide a service at their port but are unable to do so,

due to the existing national regulatory framework. Services of interest include cargo-

handling, and machineries operation, while shipowners have publicly expressed that they

„follow market liberalisation very closely‟. Two interesting remarks were (a) that some

private companies would like to take advantage of the fact that the current providers (i.e.

the port authorities) face high labour costs, and (b) that some potential providers have

already expressed concerns regarding the state of infrastructure in Greek ports.

All Greek port authorities would like to remain services providers, rather than assume the

role of the governing port institution alone. More than 50% would like to provide services

at other Greek ports, whilst two of them expressed an interest for providing services at

other European ports. Explicitly, such intentions were critically influenced by the

(medium) size of Greek ports and the fact that Greek port authorities have not any

operating experience in conditions of intra-port competition.

The general feeling was that the separation of financial accounts by service providers

would increase transparency. Yet, one CEO maintained that given the complexity of port

accounts in North Europe any measure would be incapable to provide a clear pan-

European picture. One third of the responses identified practical problems and a

remarkably lengthy process in ensuring such separation. The outcome on whether would

be appropriate for existing port auditors to take on the role of independent scrutiny of

separation of port service accounts was inconclusive. Four out of seven answers received,

were in favour of the existing regime. One CEO claimed that the critical issue is the

decision for separation, rather than the choice among potentially indifferent

implementation practices. Two CEOs demanded an independent body, as well as a code

11

of practice (including typology of accounts and the extension of accounts separation)

detailed by the national Ministry of Mercantile Marine. 5. Discussion

The Commission‟s proposal for a „port services‟ directive proved to be remarkably

controversial. Following the rejection of the initiative (as the Conciliation Committee had

detailed it) by the EP, the policy-making process was closed with no result. The debate is

however very much alive for three reasons. The European Court of Justice examines

cases related to allocation of concessions to service providers or to labour organisations

on a case-by-case approach. Then, the Commission has already presented a directive

aimed to eliminate barriers that prevent businesses from offering services across the EU

(CEU, 2004). It is not clear yet, whether its scope, that might exclude transport services

on legal grounds, would cover port services. Last, but not least, certain parts of the port

industry or port users would like to see free market to port services established. Their

interests groups try to put the issue back in the EU agenda when EU institutions are ready

to advance policy integration in the field of maritime transport (Pallis, 2002).

Some scholars have expressed the view that the directive could produce some disturbing

structural changes in European ports as it was aiming to fix an issue that it “ain‟t bust”

(Farell, 2001). These concerns were to a certain extend grounded on the potential

crowding out of private investments and to the usage of publicly funded and maintained

infrastructure and superstructure by port authorities. Trade unions who wanted to

safeguard the employment of their members have also expressed objections from a

different perspective (cf. ETF, 2002).

On the other hand shippers (ESC, 2001), shipowners, forwarders and other logistic

providers (cf. ECSA, 2002) have been among the warmest supporters of market

liberalisation. This is because they have seen in it a development towards their

involvement in the provision of port services, and not least, because they would like to

shelf-handle the cargoes they ship. The naturally positive position of private port

operators (FEPORT) has notably been expressed via a joint statement with the Euro-

group representing port authorities (ESPO & FEPORT, 2002), thought the latter group

demanded flexibility in the transposition of the rule into national legislation.

To some, this was the outcome of the Continental vs. Anglo-Saxon doctrines

(McConville, 2002), which has nevertheless expressed and determined several port policy

discussions (i.e. port pricing principles – Haralambides et al, 2001). The views of

different countries are well documented, even reflected in the final EP vote. The UK,

Scandinavia, and not least Belgium have been among the member states where discontent

was openly expressed. On the other hand, in Spain and in Italy one could find firm

supporters of the aim, if not the details, of the specific policy initiative. In the absence of

a firm position by the governors of the national port system, or a united front by the port

authorities (which are also the port operators), the preceded research provided an

opportunity to explore whether there is a „Greek case‟ vis-à-vis the proposed directive.

If post-fordism is for port governors the mean to face the adjustment pressures posed by

logistics (Noteboom & Winkelmans, 2001a), and the vital integration of ports in the „blue

water‟ and in the land-based segments of the transportation chain depends on specialised

port actors networking (rather than on ownership and control of supply assets and

12

consequent dominance of operations - Robinson, 2003), then the organisation of the port

sector needs to enter in new worlds of production. Therein specialisation and the

provision of both dedicated services stand as core elements of the operating frameworks,

along with standardisation and the provision of generic services (Chlomoudis et al, 2003).

Port planning and the role of the port authority demand new approaches, implying a

reassessment of the public sector involvement (cf. Noteboom & Winkelmans, 2001b;

Mogli & Sanguineri, 2003) In many EU countries, developments towards intra-port

competition have taken place; leading to the presence of intra-port clusters (De Langen,

2002). Greek ports need to catch up with changes as well, and develop „multi-services

provision strategies‟ (Pallis, 2003); otherwise they will stagnate.

This theoretical background assist in explaining why the Greek port authorities, which

that have not implemented any organisational restructuring because of limitations in

national port policies, clearly endorse a positive approach in response to the aims of the

proposed directive. They believe that they could make a profit in terms of revenues and

strategies, a belief that prevails any social concerns. With powers stemming from

geographical positioning eroding (cf. Heaver, 1995), CEOs in Greece do not consider the

„nature‟ of competition as the vital issue. For them the vital issue is the presence of

commercial ethos in port operations. They have not made any concessions yet, so there is

no private finance involved. Hence, legislative details regarding the length of

authorisations to service providers, or the absence of exclusivity rights for private

investors, are assessed as of secondary importance when compared either to the

contribution of the directive on public monopolies disappearance or to the generation of

conditions for labour reform. This is not to ignore that CEOs expressed some major concerns regarding the details of

the proposal. But the attractiveness of any major development that would advance the

most needed conditions (namely the improvement and expansion of port services

provided in Greek ports and lower costs for port users), for producing user-oriented

adaptability and long-term binding their customers to the port seems to be substantial.

When the market share of a port depends mostly on the provision of multiple value-added

services Greek port authorities in essence acknowledge that they would not be able to

develop multi-services provision strategies alone. Even when they express an interest to

expand their businesses in other (Greek or else) ports CEOs recognise that their

organisations posses neither the experience nor the capabilities to implement such policy.

By leading to a list of interrelated benefits (including greater flexibility, a better

price/quality of services ratio, and services expansion), the endorsement of the directive

would allow for the flexibility in the making of critical decisions, i.e. to answer the

dilemma of whether to focus on transhipment or origin-destination traffic, to choose

between searching for the benefits of aggressive competition, or prefer co-operation

(Heaver et al, 2001), or even the desirable mixture of these strategies (Song, 2003).

The mixture of these favourable opinions and of the social concerns that accompany them

opens, inter alia, the issue of port governance. Disagreeing with concepts limiting the role

of port authorities to competition monitoring institutions Greek port authorities want to

sustain the role of port services providers, and demand greater operating autonomy.

There is also a list of potential dis-benefits that includes (a) the decrease of unskilled port

labour, with noteworthy social implications; (b) the danger of cartels that control the

market of port services provision; and (c) environmental concerns. Nonetheless, the last

13

two could be avoided if clear rules governing entrance to the market would be adopted.

Similarly control mechanisms need to safeguard competition against the potential of

oligopolies and cartels that undermine market contestability (an issue important due to the

presence of global operators in European ports-Notteboom, 2002), enhance environmental

sustainability and safety, and, detail the regime according to local features.

The research suggests that the structures of the national port systems should not be

ignored in favour of a uniform approach in the EU context. This is a point that has been

present since the early discussions towards a European port policy (Pallis, 1997) and

partially endorsed by policy-makers (EP, 1999). Today it stands, at least for the port

authorities questioned, as a major issue, perhaps more important than the themes of

controversy that developed within the EU decision-making process (i.e. pilotage). This

has contributed to the absence of a national stand vis-a-vis the discussed directive. The

different markets and structures of the twelve major ports (i.e. passenger versus cargo

ports) have motivated different approaches. Yet, it should not be undermined that a

national policy towards a decentralised port system that allow port authorities to make

autonomous decisions has only recently developed, so those governing Greek ports have

been late-comers who have not participated in a great part of the EU level debate. 6. Concluding Remarks

This research has provided evidences that CEOs responsible for the operation of Greek

ports were clearly in favour of the aims of the proposed „port services‟ directive. The

current structures of the Greek port system, and the national regulatory regime that limits

the presence of intra-port competition have contributed to these views. Theoretical

concepts regarding port development have facilitated an explanation of why port

authorities that have not implemented any organisational reforms endorse such approach.

Greek CEOs have challenged certain details of the Commission‟s proposal on social and

geographical grounds. They have also questioned its homogenised approach. Still, given

the potential benefits that the implementation of the aims of the port services directive

would result in, the absence of a legislative EU outcome is for the Greek port system a

missed chance rather than a danger avoided. The adoption of a regulatory framework

opening market access to port services, with due account to the particular local

characteristics, would reinforce the quality of services provided in Greek ports and

advance an essential and organisational and operating restructuring. References

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