As predicted, Falmouth Harbour Commissioners is badly damaged but remains financially afloat after being hit below the waterline by two titanic pension fund deficit repayments and a major downturn in shipping, writes David Barnicoat.

In FHC’s annual report for 2013 chairman Dave Ellis said: “Despite considerable difficulties caused by the Pilots National Pension Fund deficit we remained profitable for the year. Our financial situation is still serious however and a negative re-valuation of the Local Government Pension Scheme has further impacted on our balance sheet.”

Only about 30 people turned up for the commissioners’ annual meeting at the town’s maritime museum.

Mr Ellis said: “The annual meeting was well attended and it was encouraging to hear guests showing a genuine interest in Falmouth Harbour Commissioners, its activities and vision for the ongoing prosperity of the port.

“The subject of dredging and the likely timings of delivery was inevitably brought up. This presented FHC, a partner in the PFDI, an opportunity to update guests that it remains committed to the project and that the data collected from the trial added substantially to the knowledge base around the project and the further work required to support the application is being evaluated and assessed.”

Total pension deficit liabilities FHC has to repay amounts to nearly £4.8 million, with £3.3 million owed to the PNPF and £1.5 million to the Cornwall Council Pension Scheme. Quite a few ports introduced a PNPF surcharge on their pilotage and conservancy charges last January to help cover the deficit repayments. Falmouth has not implemented such a charge.

Having read annual reports from at least six other ports in the UK, FHC’s 2013 report is bland, with minimal content and lacks the complete nitty gritty financial breakdowns one would expect.

In the income and expenditure account for example “other operating charges” are put down as £977,216. What do these charges totalling nearly £1 million relate to?

Income from commercial shipping accounts for the major proportion of FHC’s income. The breakdown is given for 2013 with 2012 figures in brackets.

Harbour dues for 2013 were £662,379 (£526,078), Acts of pilotage £641,163 (£774,298), Boarding and landing pilots £749,369 (£796,093) and other commercial income £28,185 (£18,960). Total income from pilotage and harbour dues was £2,081,096 (£2,115,429).

The bunkering bonanza of 2008 is over with low sulphur fuel oil now readily available in many major ports worldwide.

Cargo handling at the docks is reduced with the fertiliser trade finishing, although A&P have won several biomass contracts to ship cargoes to the Baltic. With A&P having a large number of Ministry of Defence contracts, repairing the four RFA Cluster ships, and a cyclical European ship repair market, the number of ships coming into the docks has reduced.

Commenting on the re-branding exercise, whereby FHC set up Falmouth Haven as the leisure/moorings side of their business and Falmouth Pilot Services as the commercial shipping sector, Mr Ellis said: “We also recognise the need to firmly control costs within the organisation and our strategic review has identified the benefits of creating focused business arms that can manage efficiently and effectively in the prevailing market conditions.

“In addition to the creation of Falmouth Haven we are creating Falmouth Pilot Services which will concentrate on the provision of efficient and cost effective pilotage services for our customers adapted to the current levels of demand.”

Ships will only come to Falmouth for the services it offers in the way of bunkering, ship repair and cruise facilities and for no other reason. FHC is at the mercy of market forces. One only has to look at the weekly shipping movements on this page to see how trade is dropping off.

One area the commissioners could save money is by slashing their own remuneration.

At Fowey and some other ports no remuneration is paid to the commissioners. Here in Falmouth chairman Dave Ellis picked up £8,731 with other commissioners paid varying amounts, with the total paid out being £36,200. In Teignmouth, commissioners are only paid £104 per annum for expenses of office.

On the leisure side, some south coast ports reported a slack year due to a change in people’s cruising and boating habits. The further west one comes the worse the situation becomes with yachtsmen preferring not to venture too far from home ports. This is reflected in FHC’s income from leisure facilities,

Figures are as follows: Yacht haven £149,254, Fuel barge £221,572, Custom House Quay £156,749, Boat park £68,323, slipway £10,702, residents’ moorings £194,217, visitors’ moorings £25,942 and anchorage £8,589.