We are back again with our analysis of pilotage, which, as is known, is one of the so-called “technical-and-nautical services” regulated by Article 14 of Law No. 84/94 and therein defined as general-interest services.
According to the Italian Antitrust Authority (“Autorità Garante della Concorrenza e del Mercato” or “AGCM”) (see note No. 5415/1997), despite directly contributing to the achievement of high navigation-safety standards, pilotage cannot per se justify "an a priori limitation of the number of operators". It is therefore necessary to achieve a satisfactory balance between the degree of openness of the service to competition and navigation safety requirements.
For that purpose, the main areas of action relate to: (i) the procedures for selecting concessionaires; (ii) the implementation of the right to self-handling; and (iii) tariff setting mechanisms.
(i) As concerns the selection of concessionaires, the current scenario seems to indicate a strange “stabilisation” of concessions – which, however, is no coincidence – in that, in the main ports, a concessionaire basically "inherits" the concession from itself, which prevents any turn-over of pilot companies. Such lack of turn-over not only affects market competition but also the determination of costs based on the normal dynamics of a competitive context.
The crystallisation of an operator in a given context results in flattening the level of the services on those typically offered by the operator concerned, though without triggering a competitive process in terms of price, with consequent prejudice to port users and huge impact on shipping costs.
Moreover, an unjustifiable high cost of port service favoured by a monopolistic structure might result in a shift from maritime transport to other modes having an adverse environmental and safety impact.
In this regard, it will be interesting to look at the findings of the forthcoming survey launched by the Ministry of Infrastructure and Transport (“MIT”) on the conditions for the provision of pilotage services in national ports, to identify any development trends.
(ii) As concerns the self-handling of the service, Italy and Greece are the only two European nations of some significance to the maritime transport market that still do not use “Pilotage Exemption Certificates” (“PEC”). A PEC allows entering and/or departing a port without a pilot on board whenever the master of the ship has performed a certain number of approaches with a pilot on board on that port, which involves being familiar with manoeuvring even without the direct assistance of a pilot; for that purpose, a certificate is issued to the master, which allows reducing the costs for this service.
A possible alternative – though with lower results for users in terms of actual cost reduction – is the use of VHF pilotage. Some objections have however been raised in this respect by pilots' corporations, particularly due to the pilot’s poor visibility of the operative field, which allegedly prevents the use of VHF-based pilotage.
More specifically, one should distinguish the case in which poor visibility is due to objective and unquestionable reasons (e.g. bad weather conditions) from any case in which the alleged lack arises from inefficiency due to the absence of a high observation point next to the port. In this regard, an investigation has been envisaged by the competent Ministry regarding pilotage service in national ports to assess the operational feasibility of VHF pilotage – on a case-by-case basis –, in the hope that this may give grounds for significant expansion of such mode, in such a way as to meet the objective need of cost reduction and at the same time comply with applicable operational safety standards.
At the same time, we cannot ignore the fact that the self-handling of technical-and-nautical services might entail economic balance problems for operators carrying out such business as their principal business and incurring universal service costs. in other words, whenever a shipping company or a terminal operator decides to provide one or more of those services on its own, it would eventually take money from the corporation providing the universal service, without however incurring the fixed costs of a constant presence. It is therefore necessary to carefully consider the different positions at stake.
(iii) As concerns the fundamental issue of setting pilotage tariffs, the Law (Article 14, paragraph 1 bis of Law No. 84/94) provides that the MIT Decree shall set out (a) the mandatory nature of pilotage service, (b) the tariff setting criteria and the mechanisms applying to pilotage, towing, mooring and inshore services, subject to joint preliminary investigation conducted by the General Command of Harbour Masters and joint unions of Port System Authorities, service providers and port users; on the other hand, the consultation between service providers and port users, joined in a single trade association, has as a matter of fact slowed the debate on subjects highlighted by the AGCM as early as than twenty years ago and still unsolved.
In this regard, the AGCM has already had the occasion to state that the consultation of business associations of service users is not only ineffective but also questionable, at least from a competition perspective: no representation of the operators who are likely to use the service has so far been fully put into place, with consequent breach of the principle of representation.
Concerning this, the European Court of Justice has for more than 25 years – from a 1995 judgement – expressly stated that the tariffs applying to technical-and-nautical services must be set in such a way as to allow users to verify the impact of each cost item, and, therefore, of each service provided, on the total cost of the service.
The tariff criteria for the next two years should therefore be set out in accordance with the above principles, for the purpose of a proper, fair and transparent tariff setting, capable of discouraging inefficiencies while ensuring safe navigation and reasonable margins for concessionaires.
These are very important issues that impact both the efficiency and profitability of the service under examination. In this latter respect, the fragmented presence of corporations throughout the national territory is in itself a reason for diseconomies that further worsens the conditions for providing the service to the market.
Indeed, in certain local contexts characterised by poor regular maritime traffic, the local guild (or, in its absence, a port expert) has objectively no chance to cover the costs to maintain the service from the revenues collected from shipping companies benefiting from such service. On the other hand, such realities are often contiguous to others where, on the contrary, the local corporation can rely on the presence of regular traffic that allows covering the costs of the service. In such cases, the merging of any contiguous realities characterized by distinct operating conditions would therefore easily allow allocating the universal service costs in a more equitable and useful way so as to drive down the cost of non-beneficial transport not only in the interest of shipping companies but also of all port users.
It will be interesting, therefore, to see the findings that will be arrived at by the next MIT’s survey, including with a view to aggregation of local realities and – generally – to continue along the path of enhancing the efficiency of the service in a spirit of competition, bearing in mind that “the market does not wait”.
This article is for information purposes only and is not intended as a professional opinion. For further information, please contact Franco Rossi.
