Falmouth Harbour Commissioners’ (FHC)  harbour master and chief executive, Captain Mark Sansom, is the man with the responsibility of steering FHC through stormy financial seas after it was hit by a multi-million pound pension deficit liability by the Pilots National Pension Fund (PNPF) and Cornwall Council Pension Fund, writes David Barnicoat.

FHC is probably facing the biggest financial crisis since its formation in 1870.

Captain Sansom said: “Obviously it is a challenging situation in terms of the extend of the PNPF liability but we have a very good organisation, a very good board and we are taking a considered approach to everything and we will do our best to make sure these challenges will be overcome.”

It is understood that FHC has £4.8 million to repay over a 16-year period with the valuation changing all the time. FHC has subsequently split its leisure and commercial shipping business into two separate divisions.

Falmouth Haven covers the leisure side of the business with Falmouth Pilot Services managing commercial shipping.

In the 1990s FHC faced an angry backlash from the boating fraternity when a large increase in mooring fees was proposed.

It had to be revised when the Department for Transport became involved in the row. I asked the harbour master if local boat owners were going to see big increases above inflation in mooring fees this April to help boost FHC's coffers.

He said: “I cannot tell you exactly what the published charges will be in April as all of that is still under discussion.

“It is about looking at what new services we can provide and how we can add value to the business rather than just stick with our existing products and look at straight forward percentage increases.

“The PNPF deficit is only part of the story. The number of shipping movements has fallen on succeeding years. So it is just not a question of what we do in terms of commercial charges because obviously against a declining background that's realising less revenues.

“The board has taken the strategic decision around launching Falmouth Haven to try to grow the leisure business and to increase the contribution that it makes to FHC overall. All of this is ongoing and we are not looking at putting hikes on economic price rises.”

When launched last year, Dave Ellis, chairman of Falmouth Harbour Commissioners, said: “By creating more defined leisure and pilotage services it will mean that each of those functions can develop their own business plans to optimise the performance of FHC as a whole.

“We are confident the changes will help ensure that we continue to maintain an efficient and effective organisation that will best meet the needs of the whole community.”

With the Falmouth cruise business currently stagnating, a cyclical ship repair industry and a bunkering business subject to daily market conditions, FHC need reserve financial buoyancy in the ship to stay afloat.

News that A&P Falmouth had won a major new contract with the MOD should have set the alarm bells ringing at FHC.

Commercial shipping movements in relation the docks could drop as large RFA's spend months alongside at premium deep water berths or in dry dock during the next two to three years when the new “Tide Class” ships will be undergoing customisation before entering service with the fleet.  Apart from this the other nine cluster ships assigned to Falmouth will require refits and repairs.

Harbour dues were first raised by FHC in 2013 in order to claw back money to repay the pension deficit liability.

This year’s boarding and landing charges, the charges for putting a pilot on or taking him off a ship by pilot boat, have risen by a staggering 12 per cent.  Harbour dues have increased by 14 per cent.

In a letter to port operators FHC said: “Unfortunately, we have had to increase charges above inflation for the pilot boat due to a downturn in the number of shipping movements and the large fixed cost element associated with providing a 24 hour service. Pilotage charges have risen in line with inflation.”

Captain Sansom heavily defended the increases in charges that FHC have promulgated for commercial shipping.

“We have to employ people to work the pilotage service on a 24/7 basis. We still have to own and depreciate our pilot boats, the costs remain the same, this is a very large fixed cost base.  We have to maintain a pilotage service, that's a statutory obligation. We have to offer a safe port in compliance with the Port  Marine Safety Code and we have to provide resources in order to do that.”

Unlike other ports which enjoy a regular liner trade, FHC has no way of budgeting accurately on fluctuating trade levels. Therefore, it has to budget on a realistic or a low number of shipping movements.

“Obviously, if our performance exceeds that, it gives us scope for reviewing the charges next year. The general trend has been a downward curve over the past three or four years” he said.

Behind the scenes in port circles businesses are far from happy about the new charges. There is an underlying ground swell of opinion that the new charges will have a detrimental effect on trade.

One port manager who did not wish to be named said: “We are observing from a distance at the moment. But what business puts up charges significantly when trade is dropping. It just does not make sense.”