“The ports, and the port community in general, have responded with great solidarity and professionalism. Supplies, both to the population and to industry, have been ensured at all times, and the preventative measures have worked correctly. What is clear is that, with the measures taken by the various government bodies, the return to activity will be carried out with the highest levels of control and safety, so that visitors arriving at our ports can do so with confidence, knowing that they can enjoy the destinations with full safety guarantees.”
Article from CruisesNews magazine no. 52 – June 2020
During his tenure, the Port of Castellón grew twice as fast as the average for the Spanish port system in terms of cargo traffic. However, cruise ships did not experience the same growth. Why is it so difficult to attract this traffic? How would you describe your experience promoting cruise ship calls at a port like Castellón?
Cruise ships don't go to the port itself, but rather to the tourism offerings available in the surrounding area. In that sense, Castellón lacked a specific offering designed for cruise passengers, and it was necessary to bring together all the relevant sectors, both public and private, to develop one. The results are beginning to show: from an average of 700 cruise passengers per year, the number reached 5,462 in 2019, making it the Spanish port with the highest percentage growth compared to 2018. This has allowed PortCastelló to climb four positions in the cruise passenger rankings. There is still much to be done, but the medium-term future is promising if we work persistently on this.
In 2019, the Port of Castellón was the most profitable in terms of equity. What's the key to making a port profitable?
On the one hand, it's about reducing operating and financial expenses and increasing revenue. This is achieved through optimization and efficiency measures on the expense side, and on the revenue side, through commercial strategies and traffic diversification to ensure sustainability.
On the other hand, the human factor is key. It is essential to have a Port Community that is aligned and strives daily to gain competitiveness and serve the economy and industry of its hinterland.
You've gone from managing a single Port Authority to coordinating 28, which are those overseen by State Ports in Spain. Beyond the purely quantitative aspects, what other significant differences have you found between the two roles?
Many. The need to coordinate work with the government actions of the various Ministries, to manage the diversity of the 28 Port Authorities, to have direct communication with industry associations, to have the capacity to introduce changes to the system… In any case, these past months have been marked by the state of emergency declared due to the health crisis, and it has been necessary to manage things beyond the ordinary in order to generate useful protocol recommendations and respond to the problems that arose in the ports and that the Port Authorities couldn't resolve on their own.
What is your perception of Spanish port infrastructure dedicated to cruise traffic?
Spanish ports have excellent infrastructure, and in most cases, rather than immediate growth, what they need is to improve their connections with the rest of the transport network, particularly the railway. However, few have good cruise terminals because that requires a critical mass of annual cruise passengers. Nevertheless, several ports have projects to improve their cruise infrastructure, and this is a sign of their commitment to the sector.
How has the Spanish port network dealt with the COVID-19 crisis?
The ports, and the port community in general, have responded with great solidarity and professionalism. Supplies, both to the population and to industry, have been ensured at all times, and the preventative measures have worked effectively.
Furthermore, the port system has been responsive to the health and economic challenges posed by the pandemic. Thus, under the mandate of the Ministry of Transport, Mobility and Urban Agenda (MITMA), medical supplies have been purchased, action protocols have been established, and economic measures have been implemented that will generate savings of up to €100 million through reduced fees and deferred payments, injecting more than €250 million of liquidity into port operators, with the aim of preventing the crisis from destroying the logistics infrastructure.
Regarding passenger traffic in general and cruise traffic in particular, which has been the most affected by the crisis, ceasing almost entirely, we at State Ports have made multiple efforts with the crisis unit to facilitate the disembarkation of passengers and the repatriation of crews.
I have already publicly thanked the entire Port Community, without exception, for their efforts, and if you will allow me, I would like to do so again through your medium.
Why hasn't Spain been more flexible in allowing cruise ship lay-ups? Why have only a few ports been able to allow cruise ships with only crew on lay-up or standby to dock, while others haven't? I'm referring to Tenerife, Las Palmas, and Málaga.
We went through a very difficult time in the early stages of the pandemic, and the border closures decreed by the Government, at the behest of the Ministries of Transport and Health, required strict controls on the entry and exit of passengers at border crossings, and ports were included in these restrictions. However, in exceptional circumstances, the docking and disembarkation of passengers has been permitted, always under the control and supervision of the Ministry of Health. All requests received by State Ports have been addressed.
How do you think the recovery of cruise traffic in Spain will be?
It's fair to say that, in terms of cruise traffic, we'll be starting from scratch once the state of emergency ends, since tourism activity worldwide has come to a standstill. Announcements from the main companies in the sector point to a slow summer, which is understandable because the cruise industry isn't something you can just wing; it needs time to market its offerings. Things are expected to return to some semblance of normality starting in the fall, but the forecast for next year is for a return to usual traffic levels. It's important to remember that a high percentage of cruise passengers are repeat visitors and won't give up this form of leisure and tourism.
What is clear is that, with the measures taken by the different Administrations, the return to activity will be done with the maximum control and security measures, so that visitors arriving at our ports do so with confidence, knowing that they can enjoy the destinations with full safety guarantees.
The first examples of the new generation of cruise ships using clean fuels like LNG are currently being delivered. For many, this should be a turning point in the environmental strategy of State Ports. Regarding cruise ships, how is their commitment to the sustainability of port activity, and more specifically the use of clean fuels like LNG, being implemented? Will they promote its use with reductions in fees, etc.?
Spain, out of conviction and commitment to the EU, is determined to comply with Directive 94/2014, which requires equipping the transport system with infrastructure that enables mobility using more sustainable energy sources, including natural gas. Compared to traditional fuels, LNG eliminates 100% of sulfur oxide (SOx) emissions, between 80 and 90% of nitrogen oxide (NOx) emissions, and between 20 and 30% of CO2 emissions. This already helps to meet increasingly stringent environmental standards in the maritime sector and to advance the decarbonization process of the Mediterranean and Atlantic corridors, in line with the European Union's strategy on alternative fuel infrastructure.
In terms of infrastructure, Spanish ports such as Ferrol, Bilbao, Barcelona, Cartagena, Huelva, and Sagunto have adapted or are in the process of adapting pontoons at their plants for bunkering and small-scale fuel supply. In fact, the first regular supply operations began in the port of Barcelona in 2017, the first pipe-to-ship (PTS) operation in Europe was carried out in the port of Cartagena, and the first ship-to-ship (STS) operation in Southern Europe was deployed in the port of Bilbao.
Furthermore, Puertos del Estado (State Ports Authority) has been leading the “Core LNGas hive” project since 2016. Its objective is to develop an integrated, secure, and efficient logistics chain for supplying LNG as fuel to the transport sector, especially maritime transport, in the Iberian Peninsula. The project includes 20 studies, driven by the partners, for adapting infrastructure and developing logistics and commerce to enable small-scale bunkering and LNG bunkering services. The project, coordinated by Enagás, has 47 partners from Spain and Portugal: 8 institutional partners, including the Directorate General of the Merchant Marine; 13 port authorities; and 21 industrial partners, including LNG operators, shipbuilders, regasification plants, and other companies. Currently, 'LNGHIVE2' is being developed, which is a continuation of the previous one, and a total investment of €139M and European co-financing of €39M is estimated.
The commitment of Spanish ports, as infrastructure managers, is to work to guarantee the efficient and safe supply of LNG in our ports and to facilitate market development throughout this decade. We will continue to support projects that enable the supply of LNG at a competitive price, fostering stable supply agreements between distributors and shipping companies. Likewise, we will continue working on regulating the service to provide a suitable framework for the development of LNG bunkering activity in our ports.
Regarding the reduction in fees, I can confirm that the Ports Law, in Article 197, already includes this possibility. It provides for a 0.5 reduction coefficient in the full fee that determines the vessel's tax for vessels that use natural gas as fuel for propulsion at sea, as well as for vessels that, while in port, use natural gas or electricity supplied from the dock to power their auxiliary engines.
Cruise ship owners always explain that a very high percentage of their vessels are equipped to connect to the local power grid in port (or "cold ironing"), avoiding the operation of auxiliary diesel engines that generate emissions. Does Puertos del Estado (State Ports Authority) plan to promote this solution?
Absolutely, OPPE (State Ports Authority) will support the cruise sector in its commitment to protecting the environment of the ports they visit. We are working intensively on a Master Plan to provide electrical connection points to supply energy to a select group of fleets in almost all ports, and one of the priority fleets is the cruise fleet. In fact, several Port Authorities have already taken significant steps in this regard and have begun carrying out the corresponding detailed technical studies.
Finally, it must be acknowledged that cruise ships are very power-hungry vessels due to the comfort provided to passengers, which we measure in the thousands of cruisers per ship. This high power consumption requires significant investments in electrical equipment within the distribution network itself, and also in the docks due to two factors: we need to convert the electrical frequency, which on cruise ships is 60 Hz, and we also need sophisticated cable management equipment capable of delivering power at different heights and positions along the quayside to serve the diverse fleet using a berth.
However, as I say, we have made significant progress with this Plan, which includes up to 20 cruise ship charging points in 10 ports, and whose cost represents half of the entire Plan budget, given the high cost - as I say - of these charging points.
European Directive 94/2014 on alternative fuel infrastructure includes a recommendation that by 2025, major European ports will need to have charging infrastructure at their docks to allow ships to connect to the grid while in port. Some competitors, such as the Port Authority of Marseille, are investing in electrical hookups for ships docking in their port, with the aim of becoming the first 100% electric port in the Mediterranean by 2025. As a port system, do you see it as feasible to generalize this infrastructure in just five years?
Unfortunately, I don't think it's realistic to say that we'll electrify ports in five years, or even that all ships will connect to the grid while docked.
However, I can announce that there are enough 'dance partners' – meaning docking stations and shipping companies – that if we manage to get them electrically connected, we will have achieved a significant benefit for the surrounding population, as is the case in the ports of Santa Cruz de La Palma, San Sebastián de Gomera, or Palma de Mallorca, to name just three examples, where ferries will stop generating noise and vibrations at night. I can also inform you that there are container shipping companies that have their vessels adapted and that already connect regularly in California and in ports in Asia. In Spain, we will also achieve this, and we will reduce our carbon footprint and improve air quality in our cities.
Apart from these two interesting questions, I would like to inform you that the Plan I mentioned has paved the way by adopting the following critical administrative measures:
• A 50% reduction in the port fee levied on ships staying in port when they connect to the general electricity grid
• (Nearly) elimination of the electricity tax applicable to OPS supply
• Legal authorization for public administrations to spend on electrical infrastructure and market the electricity they will supply to ships
• Establishment of the necessary regulatory framework to agree on temporary supply contracts that will enable the viability of installations that, in their initial phase, will only have a few client ships
• Approval—by the Spanish Office for the Fight against Climate Change—of a subsidy of €9.7 per ton of CO2 avoided during the connection of ships to the general electricity grid
• Favorable application/exemption of VAT applicable to the supply of electricity to ships in national and inter-island cabotage (the latter is the only one pending implementation)
His predecessor, Salvador de la Encina, announced that the state-owned port system would invest €286 million in passenger infrastructure between 2019 and 2022, of which more than €219 million would be allocated to cruise ships. Amid the current crisis, and with a foreseeable decline in cruise traffic, will these investments be maintained? Will Puertos del Estado (State Ports Authority) continue to invest in infrastructure for cruise ships?
That figure referred to the 2020 Business Plan, which is still in effect, although we are already working on the preparation of the next Business Plan, 2021, in which we will update the overall situation of the ports resulting from the COVID-19 pandemic and plan actions to be carried out in the coming months. Regarding investments specifically, we are in the process of reviewing them, with the aim of bringing them forward to help the economy recover. The figures are still being compiled and I cannot provide specific values as they may change.
In our Business Plans, our commitment to the cruise segment will remain, and we are prepared to continue the investment strategy implemented in recent years, which has yielded excellent results. Our investments are always aimed at meeting the needs and requirements of our clients, both in terms of the volume of activity we handle and the quality of service we provide. In this regard, we will also work closely with cruise lines to adapt as effectively as possible to any new requirements that may arise in the sector as a result of the pandemic. The cruise industry is likely to undergo significant changes after this crisis, and ports will need to adapt to the new strategies implemented by cruise lines, including those related to infrastructure needs.
Among the planned investments, the expansion of the Adosado dock in the port of Barcelona stands out, representing an investment of 54 million euros. Furthermore, various projects will also be carried out in the port of Palma de Mallorca for 116 million euros. In both ports, leaders in this type of traffic, there is some institutional opposition from regional governments and local councils, as well as anti-cruise ship movements. In this context, could these new infrastructures not exacerbate the negative impact of cruise ships in terms of overcrowding?
The opposition shown by some regional governments and local councils is not so much against the arrival of cruise ships themselves, but rather they are demanding a consensus with the shipping companies and port authorities to ensure orderly and sustainable tourism that does not overcrowd destinations. This can be achieved through good planning and a diverse range of activities and destinations, but first, the necessary infrastructure must be in place to adequately accommodate these large ships carrying thousands of passengers.
But in this debate, as with the one about arrivals via airports, we mustn't lose sight of the real issue: visitors arrive at ports and airports because they are going to their destinations. Therefore, destinations are a fundamental part of the equation for achieving a satisfactory balance.
If we are able to solve that equation, together with the measures being taken in ports to reduce environmental impacts, we can be optimistic about the future of the sector.
And finally, how do you see the future of cruise tourism after the Covid-19 crisis? Will the Mediterranean continue to be the second most important cruise ship destination in the world?
Spain as a whole will continue to be one of the world's leading tourist destinations. Our cultural, gastronomic, and leisure offerings, our climate, our infrastructure—we have everything we need and desire to maintain a privileged position in this sector, which is so important to the Spanish economy. It will take time to rebuild the sector, and whether that happens sooner or later will depend on the performance of the global economy and tourism. And if I have to choose between the Mediterranean as a destination, I believe it will continue to hold a prominent position in the cruise industry.
