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Port Development

They’ve got the power…

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By Remy G.A. Vyzelman

Captain Vyzelman is president and CEO of Integra Marine and Freight Services and chairman of the Supervisory Board of Integra Port Services

  

Key players who shaped the history of our ports

Why did ports the world over develop in the way they have, with docks and warehouses all concentrated in specific areas? What key role did customs officers and shipping agents play in shaping this long history – and are there lessons to be learned by today’s ship and port operators? R.G.A. Vyzelman* believes there are.

There have been three notable tipping points in the history of port development.

Two of these were related to customs law and excise taxes and they occurred many years apart, in the early 13th century and in the opening years of the 19th century. They set the pattern for modern-day seaports in terms of berths, warehouses and the separate roles of ship’s crew, stevedores, shipping agents and customs authorities.

The impact of customs legislation has sometimes been arbitrary. For example, ports were obliged to expand their storage areas because of slow customs clearance procedures. This was not a positive development, because the purpose of a port is not the storage of goods. The highest efficiency is achieved if the goods are discharged from the ship and immediately cleared into commerce. Goods do not belong in the port. They belong in households, shops and supermarkets.

Customs too often exercise their authority in an incorrect manner instead of collecting duties efficiently and consistent with the smooth transit of goods to the importer.

The third tipping point came in 1991 with the eighth session of the United Nations Conference on Trade and Development (Unctad) in Colombia – resulting in the Cartagena Commitment – which had a major impact not only on port development but on liner shipping as a whole. The complete logistics shipping chain was altered forever.

Customs law and excise taxes
Wharf development began in medieval times and continued in the 13th and 14th centuries. The first trade in small boats was conducted by beaching them. This practice could not continue while trade grew, because it was subject to favorable weather and tides.

The development of ports as a collection of multiple wharves in a confined area began in the early 13th century, driven mainly by trade between European ports. The principal trade route was between Continental Europe and England (wine, spirits, clothing and agricultural products to England and wool to Europe).

Early days: small boats
Because of draft restrictions, cargo was transferred to shore from sailing ships at anchor by small boats that were beached; or cargo was transferred by gangway. The first trade between the Continent and England had to deal with the huge tidal range. This required solutions that would allow vessels to berth safely.

In rivers, ships lay alongside the bank to load and discharge via gangway. The semi-diurnal tides caused the ships to ground twice a day, sitting in the mud. According to Gordon Jackson, in his book ‘The Rise and Fall of British Ports’, the earliest use of the word ‘dock’ was to describe the hollow in the mud made by a ship at low tide. The next ship to dock would often try to sit in the same hollow.

River banks were protected to prevent them caving as a result of traffic – for example, embankments and piles driven into the bank to support wooden decks.

Later, wharves were built along river banks or in harbors at locations with enough depth to accommodate sailing ships. Trading companies and shipowners were the first to build wharves, with each choosing its own convenient location or wharf. Ports thus consisted of stretches of coast or river bank.

Gordon Jackson writes: “There was not much to stop the use of scattered locations, often picked to wrest the right to trade from the feudal system that controlled the economy of the Crown.”

The same thing happened in Continental Europe.

In order to prevent smuggling and ensure the collection of duties, Great Britain – or ‘the Crown’ – was the first national authority to introduce legislation that required international cargo to be handled at a designated wharf, assigned as a port of entry. So a port was no longer a place where a ship might conveniently load or discharge its cargo, but a location where it could do so legally, under the supervision of the Collector of Royal Customs.

Smuggling continued, however, due to a lack of supervision at other locations.

After various Acts that made it a felony to trade elsewhere, the Crown in 1558 tried to end the chaos by listing all ports where legal international trade was permitted. These ‘legal quays’ were later referred to as king’s or government wharves and, later, public wharves or general wharves.

Private wharves were forbidden to handle international trade but could deal with cabotage. The Crown would later appoint harbor masters to manage the legal quays. Other governments would adopt the same practice. In the second half of the 20th century the responsibilities would be delegated to a government entity such as a port authority. Port development really took off in the 16th and 17th centuries as a result of these changes.

Within Europe, countries sought cooperation to trade their goods and trading towns grew. Old European cities such as Amsterdam would discharge boats direct to shore or private warehouses on canals. The Hanseatic cities became major trading centers.

England led the development of Admiralty law and customs legislation. Other European countries followed in the light of the cooperation – but mainly not to lose market share of international trade.

The customs authority was set up to enforce tariffs and collect taxes. England at the beginning of the 13th century is believed to have been the first country to set up a national customs collection system created by legislation. Earlier custom taxes also applied to exports. This was later replaced by indirect taxes.

In 1207 the king levied a tax on the export of wool to Continental Europe. High sales taxes on wool had made it attractive to export to the Continent to evade the taxes. Before the early 13th century, wharves and other cargo handling locations had been scattered along coasts, river banks and beaches – ideal for smuggling.

The first customs legislation in 1207 forced all imports and exports to designated locations. The first ports as we know them today, as collections of wharves, were in the making. But an important aspect remained: ships were only allowed to berth and discharge their import cargo or load export cargoes, after the import or export duties respectively were paid.

If only for part of the import cargo the import duty was paid, the vessel was allowed to only discharge that part onto the cart of the merchant importer, under close custom supervision. Thereafter the vessel immediately had to shift back to a designated anchorage (harbor roads) until the next batch of cargo was bought and duties were paid. In other words, the ships also acted as "floating warehouses".

Waterfront warehouses
In the second half of the 18th century production of commodities such as sugar, cotton and coffee in the colonies increased almost sevenfold. Meanwhile, the growing population in the colonies led to a huge increase in demand for goods imported from Europe. There simply was not enough ship tonnage to meet this demand, while over 70 per cent of tonnage was at anchor in ports.

Construction of more sailing ships was hampered by a shortage of oak trees (about 3,000 oak trees were needed to build one ship). The British government realized that the collection of customs duties had become a bottleneck for the growth of commerce and trade.

Therefore in 1803 Britain introduced the Warehouse Act (with other countries following suit). This law introduced the ship’s agent, who was legally required to take over responsibility for the goods in the warehouse. The ship’s master transferred the cargo into the temporary custody of this agent. While the cargo was in the warehouse, the ship could discharge all its cargo and sail.

This accelerated trading and dockside business. It opened the way for agents to own or lease the warehouses. The ship’s crew was still responsible for discharging and loading the cargo, but was often supplemented – or later replaced – by a labor force supplied by the agent. By the time sailing ships had been replaced by steamships and motor vessels, the agent had become the sole entity to handle the cargo.

Stevedoring companies were born, but as an informal entity. The agent remained the formal entity responsible for temporary storage in dockside warehouses. Over time, the duties of ship’s agent and stevedore have been separated, but there are still territories where these duties are performed by one entity.

The introduction of steamships, with much smaller crews, also contributed to the use of shore labor for loading and discharging.

Not too long ago in Europe, legislation was changed to allow terminal operators to take over responsibility for the cargo in temporary storage directly from the captain of the ship; but only on behalf of the agent, who remains ultimately responsible for the cargo.

After 1860
Open storage was allowed if the cargo was too large or dangerous or otherwise unsuitable for warehouse storage. Fencing became imperative. So Customs taxes and custom law actually started the real development of ports by directing all wharves to a confined area.

*R.G.A. Vyzelman has described three historical tipping points in a presentation entitled ‘Port development in a historic perspective’. The third and most recent tipping point – the eighth session of Unctad in Colombia in 1991 – was covered in the last issue of Caribbean Maritime.