'We're seeing the economy recover - every month since 2013 has shown an increase'
Interview with Eamonn O'Reilly, CEO, Dublin Port Company
Published 14/01/2016 | 02:30
With a year of record traffic behind him, the Dublin Port Company boss talks to our reporter about coming back to boom levels, trade, expansion plans and why having to pay dividends is a good thing.
From a meeting room in Dublin Port Company's headquarters, with near panoramic views of the sprawling freight operation below, Eamonn O'Reilly points to an area packed with cars.
"The import side is definitely moving," he says. "You can see it particularly in the trade in cars, up 102,000 on last year. We built that yard, that's for all the new cars. There's a car ship down there at the moment that's full of VWs and Audis and so forth."
O'Reilly, Dublin Port Company chief executive, is in breezy, upbeat form. And it's understandable.
The commercial semi-state has just published a record set of figures. Traffic through the port last year surged 6.4pc year-on-year. Total throughput was 32.8m tonnes with 7,166 ship arrivals in the year. That exceeds the pre-crisis peak.
"We got within a hair's breadth of the 07 peak last year," he says. "The peak was 30.9. Last year we hit 30.8. We were there for all practical purposes. So this year we've taken a very substantial leap forward: 6.4pc in the year. It's a big figure. We're at 32.8m gross tonnes for 2015 and expecting more."
At the coal face of global trade, ports can pick up on developments in the economy a year out, O'Reilly believes.
"We are seeing the economy recover and seeing it since April 2013. Every single month since 2013 has shown an increase on the month in the previous year," he says.
Reflecting the bounce back in domestic demand, import traffic rose slightly faster than exports through the port last year, with imported trade vehicles recording a massive 25.8pc surge.
But the port's business is more than simply trade. A total of 1.8 million ferry passengers travelled through last year - up 5.1pc. And more and more luxury cruise ships are choosing Dublin as a location. Over 90 vessels visited last year, driven, in particular, by the port handling cruise ships greater than 300 metres in length for the first time.
O'Reilly, who has been in the role since 2010, admits he was initially sceptical of the cruise business and how it would impact on the port's operations. "When I came into the business I wouldn't have been overly enamoured, thinking those ships were getting in the way of the good cargo. But my view would have changed on that. It's actually a very good business for the port to be in," he says.
The first ship of 2016 is due to arrive this month, but as you would expect, the season kicks off in earnest from about April.
"Our role is to provide infrastructure. We don't actually need to be actively marketing to cruises. The attraction is the city, not the port. Some people have criticised the condition of the berths where the cruise ships come in, but it hasn't stopped that business growing. We've built a business from nothing by bringing cruise ships onto cargo berths and we've grown it to the point now where it makes sense to invest in berths closer to the city."
O'Reilly believes there's great potential for so-called turnarounds, thanks to close access to Dublin Airport and the Port Tunnel.
"The only constraint I see for that is the well publicised issue of hotel accommodation in the city. It's an increasing issue, and unless there is some very large hotels, 1,000-bed hotels, that is the type of thing that would be needed."
But with trade vehicles up 26pc and tourist vehicles rising 8.3pc, you would assume all that traffic would place a burden on the capital's already creaking transport infrastructure as well, as trucks and cars move from port to road.
Not so, says O'Reilly.
"If you come down here about 5.30am, you'll see an Irish Ferries ship, a Stena ship, a P&O ship and Seatruck ship. These ships are measured in terms of lane metres. There's 13,000 lane metres of trucks on these four ships in the morning. Roughly half of them go straight out the [Port] tunnel, before the roads are busy. All of the other timings of the ships are determined by the peak. So a lot of the peak traffic coming out of the port are outside of the peak times for commuters."
For O'Reilly, it's all about managing the demands placed on him and the port's infrastructure to be able to accommodate the record increase in traffic, both trade and tourism-related, and the projected traffic over the coming decades.
In that regard the port received a boost last July when it was given the green light for a €230m upgrade, the biggest in its history.
An Bord Pleanála approved plans to redevelop 3km of berths to accommodate larger ships, and deepen the entrance channel to a depth of at least 10 metres.
The Alexandra Basin Redevelopment project is the biggest single upgrade in the history of the port and will take five years to complete.
The project involves rebuilding 42pc of the berths in the port, or 3km of the existing 7km, and increasing the depth from 6.5 metres to 10 metres.
In addition, a 10km channel stretching from the East Link Bridge to the Dublin Bay Buoy, 5km offshore, will be deepened from 7.8 metres to 10 metres. This will take six years.
Berths for cruise ships will be provided at the East Link Bridge, allowing passengers and crew to travel into the city centre by foot or on the Luas, while Alexandra Quay will be extended to 130 metres. Heritage works are also planned.
"Work has started. More work will commence in March, based on the planning permission. We are in the construction business for the next couple of decades. Whatever we do, we got to make sure it's broadly correct in terms of what we'll need in 15 or 20 years time. It's the first phase to maximise the footprint of the port."
An attempt back in 2010 to infill a large area fell foul of the planners and environmentalists.
O'Reilly says the infill option isn't on the table at present. "It remains within our master plan as a possible option, but equally we've committed to develop the footprint of the port to the greatest extent possible, and we think we can do an awful lot with the exiting footprint before we even have to think about that again, if ever. Who knows?"
Dublin Port Company last year paid a dividend to the State of €8.8m, representing 30pc of the port's distributable profits for 2014. O'Reilly is expecting a dividend of in and around €9m to be paid this year. Since 2007 Dublin Port Company has paid the Government a total of €78.6 million in dividends.
With expansion plans well under way, wouldn't it be easier not to have to make these payments?
O'Reilly thinks not.
"There's a lot of capital tied up in this business. The State is entitled to a return in capital, and that return comes to the State directly, and that is through the dividend. And that is good discipline for the company, we are, after all, a commercial company.
"You have to fight for your capital, you have to work hard to keep your return on capital and your margins. I don't think it's a good thing that the company just makes more and more cash, and just let's it grow. It is a discipline that any company needs. On the commercial side, you have to be working to some objective, and there's no better objective than giving a dividend to a shareholder."