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FeedsHome: Issue 4 2012 › Lead Story › Back to the future
Back to the future
15/05/2012 | Channel: Bulk / Container Shipping
With new container and logistics centres planned for London and Liverpool, Stephen Carr looks at the development of port-centric logistics
For much of the 20th century, the Ports of London, Liverpool and Manchester dominated the UK’s logistics landscape for internationally traded goods. Many people argue that containerisation and the dock labour scheme were the reasons for their demise in the 1980s.
However, there was one other factor at play in the eighties and it is important to understand it, so we can anticipate how the container market landscape will change in the future.
In the 1980s road transport was cheap and easy. Motorways continued to be built ensuring excess road capacity was available and diesel prices were low (look away now – 30 pence per litre excluding VAT). Carbon was something found in a pencil and congestion was more often a problem with a blocked nose than a blocked road!
However, road transport is no longer cheap or easy. Diesel prices for businesses are around £1.15 per litre (excluding VAT). Traffic congestion is now so routine that national and local radio broadcast travel updates every 15 minutes. In the first decade of the 21st century, road transport has grown six times faster than road capacity and more frightening is the DfT’s prediction that it will increase by 43 per cent by 2035 (from a base in 2003). Other changes that have affected the ease of road freight include the carbon levy, working time directives and more stringent tachograph rules for drivers.
Meanwhile, at sea, container ships have been getting bigger and bigger. Ships above 13,000 TEU are becoming commonplace and Maersk’s EEE class vessels at 18,000 TEU will raise the bar even higher. To ensure these vessels remain economic, box exchanges in port will rise to 5000 per vessel call, which will lead to an increased pressure on local and regional road networks. The congestion this will cause in the local port zone, combined with the congestion on a national network means that both shipping lines and ports have to address how they tackle the inland flow of goods.
It may seem strange that an article on shipping is so focused on land based transport issues, but it is important as the landscape and strategies for shipping lines and terminals is already changing as a result of these issues.
In the 1990s, ABP developed the Hams Hall rail freight terminal near Birmingham and the rail capacity at Felixstowe continues to receive investment to support capacity growth. However, even when the most optimistic view of additional rail capacity is combined with a relatively pessimistic view of growth; it is clear that not much more than 25 per cent – 30 per cent of the UK container volume will move inland by rail.
In the first decade of the 21st century, Teesport in particular made significant progress with its port-centric strategy, which it argues, sees ‘factory to shelf time reduced and logistics costs minimised’.
It is noticeable that the next two big developments in container terminals will be at London (Gateway) and Liverpool (Liverpool2). Both projects are major container terminal developments in their own right, but both also incorporate major logistics parks – in the case of Liverpool2, incorporating facilities along the banks of the Manchester Ship Canal which link to Liverpool by barge.
Some people think these steps are revolutionary – but are they? When you look round old port cities you will see a multitude of warehouses that have now been converted to flats, offices and hotels – testament to the first age of port-centric distribution.
But why London and Liverpool? Simple really – these two ports succeeded for much of the 20th century because they were the closest ports to the major population centres. They minimised the use of relatively difficult and expensive road transport. The population around London is well understood, but fewer people realise that 13 million people live within 70 miles of the Port of Liverpool and the Manchester Ship Canal. When you add a further six million people in the isle of Ireland (Liverpool will be the closest deep-water container port) you realise that history may have had it right all along.
So is history coming back to the future? Do container lines care about inland logistics costs or the difficulty in moving goods from A to B? Well, some may and some may not. But the final lesson from history is what happens when people try to ignore what is happening around them. The Ports of the Liverpool and London believed they were too big and could avoid containerisation. The prize was big enough and the sleepy fishing town of Felixstowe is now the UK’s largest container port. It only needs one or two container lines to realise the potential and the market will shift.
We have already seen major brands based in the 9North-West such as Typhoo, Kellogg’s and Shop Direct divert more cargo through Liverpool and this is due to the cost benefit and improved reliability offered by ports closest to their operations. Teesport and the Port of Tyne have also seen major brands divert cargo, including Tesco, Asda and JML, for similar reasons. As the burden of the Carbon Reduction Commitment grows, more and more companies will balance their economic decision making with environmental factors too.
The Liverpool2 and London Gateway developments will leave both shippers and shipping lines with choice and options for routes into the UK. The factors that supported shift away from these two ports in the 1980s could in reverse support their revival in the 2010s.
STEPHEN CARR
Stephen Carr is head of business development for Peel Ports (Mersey). Peel Ports Mersey comprises the Port of Liverpool and Manchester Ship Canal. Together they offer a comprehensive range of port services including an integrated logistics hub with multimodal access and port-centric facilities. The Port and Canal form the ‘green’ gateway to an economy of more than 120,000 enterprises and a population equal to that of greater London, handling 40 million tonnes of cargo and 15,000 ship movements annually – making the River Mersey Britain’s third busiest estuary.
For more information, visit: www.peelports.co.uk
However, there was one other factor at play in the eighties and it is important to understand it, so we can anticipate how the container market landscape will change in the future.
In the 1980s road transport was cheap and easy. Motorways continued to be built ensuring excess road capacity was available and diesel prices were low (look away now – 30 pence per litre excluding VAT). Carbon was something found in a pencil and congestion was more often a problem with a blocked nose than a blocked road!
However, road transport is no longer cheap or easy. Diesel prices for businesses are around £1.15 per litre (excluding VAT). Traffic congestion is now so routine that national and local radio broadcast travel updates every 15 minutes. In the first decade of the 21st century, road transport has grown six times faster than road capacity and more frightening is the DfT’s prediction that it will increase by 43 per cent by 2035 (from a base in 2003). Other changes that have affected the ease of road freight include the carbon levy, working time directives and more stringent tachograph rules for drivers.
Meanwhile, at sea, container ships have been getting bigger and bigger. Ships above 13,000 TEU are becoming commonplace and Maersk’s EEE class vessels at 18,000 TEU will raise the bar even higher. To ensure these vessels remain economic, box exchanges in port will rise to 5000 per vessel call, which will lead to an increased pressure on local and regional road networks. The congestion this will cause in the local port zone, combined with the congestion on a national network means that both shipping lines and ports have to address how they tackle the inland flow of goods.
It may seem strange that an article on shipping is so focused on land based transport issues, but it is important as the landscape and strategies for shipping lines and terminals is already changing as a result of these issues.
In the 1990s, ABP developed the Hams Hall rail freight terminal near Birmingham and the rail capacity at Felixstowe continues to receive investment to support capacity growth. However, even when the most optimistic view of additional rail capacity is combined with a relatively pessimistic view of growth; it is clear that not much more than 25 per cent – 30 per cent of the UK container volume will move inland by rail.
In the first decade of the 21st century, Teesport in particular made significant progress with its port-centric strategy, which it argues, sees ‘factory to shelf time reduced and logistics costs minimised’.
It is noticeable that the next two big developments in container terminals will be at London (Gateway) and Liverpool (Liverpool2). Both projects are major container terminal developments in their own right, but both also incorporate major logistics parks – in the case of Liverpool2, incorporating facilities along the banks of the Manchester Ship Canal which link to Liverpool by barge.
Some people think these steps are revolutionary – but are they? When you look round old port cities you will see a multitude of warehouses that have now been converted to flats, offices and hotels – testament to the first age of port-centric distribution.
But why London and Liverpool? Simple really – these two ports succeeded for much of the 20th century because they were the closest ports to the major population centres. They minimised the use of relatively difficult and expensive road transport. The population around London is well understood, but fewer people realise that 13 million people live within 70 miles of the Port of Liverpool and the Manchester Ship Canal. When you add a further six million people in the isle of Ireland (Liverpool will be the closest deep-water container port) you realise that history may have had it right all along.
So is history coming back to the future? Do container lines care about inland logistics costs or the difficulty in moving goods from A to B? Well, some may and some may not. But the final lesson from history is what happens when people try to ignore what is happening around them. The Ports of the Liverpool and London believed they were too big and could avoid containerisation. The prize was big enough and the sleepy fishing town of Felixstowe is now the UK’s largest container port. It only needs one or two container lines to realise the potential and the market will shift.
We have already seen major brands based in the 9North-West such as Typhoo, Kellogg’s and Shop Direct divert more cargo through Liverpool and this is due to the cost benefit and improved reliability offered by ports closest to their operations. Teesport and the Port of Tyne have also seen major brands divert cargo, including Tesco, Asda and JML, for similar reasons. As the burden of the Carbon Reduction Commitment grows, more and more companies will balance their economic decision making with environmental factors too.
The Liverpool2 and London Gateway developments will leave both shippers and shipping lines with choice and options for routes into the UK. The factors that supported shift away from these two ports in the 1980s could in reverse support their revival in the 2010s.
STEPHEN CARR
Stephen Carr is head of business development for Peel Ports (Mersey). Peel Ports Mersey comprises the Port of Liverpool and Manchester Ship Canal. Together they offer a comprehensive range of port services including an integrated logistics hub with multimodal access and port-centric facilities. The Port and Canal form the ‘green’ gateway to an economy of more than 120,000 enterprises and a population equal to that of greater London, handling 40 million tonnes of cargo and 15,000 ship movements annually – making the River Mersey Britain’s third busiest estuary.
For more information, visit: www.peelports.co.uk
