Any storm in the UK ports?

This month, DP World announced a 2013 opening date for London Gateway, as well as the creation of 1,000 new jobs.

In two years the UK will boast a new deepwater port and Europe's largest logistics park. How do Felixstowe and Southampton view this potential rival for their business? asks Isabel Lesto

 The announcement on 4 October received coverage in theinternational press and was attended by UK Business Secretary Vince Cable, Shipping Minister Mike Penning, DP World Chairman Sultan Ahmed Bin Sulayem, CEO Mohammed Sharaf, CEO of London Gateway Simon Moore and what looked like a good few hundred guests.

It was hard not to get caught up in the moment. In his speech, the UK’s Business Secretary said: “The importance of this project cannot be overestimated. The announcement of these 1,000 new jobs today is a welcome boost to the UK.

“London Gateway is set to become the premier UK logistics centre. Once complete, the new port and park facility will save UK business millions of pounds every year in land transport costs.

“An estimated 65 million road freight miles every year will be saved as many goods will no longer need to be transported from deepsea ports to inland distribution centres.  Instead, goods will be sent straight into the new London Gateway Logistics Park and then directly to shops and homes.”

But then an industry source suggested to me: “If you are shipping freight to London, I can understand you wanting to use London Gateway; but it will take longer for ships to get there and then you are offloading in the most congested part of the country.”

Cue bubble-burst. I decided to ask the ports of Felixstowe and Southampton how they viewed the future UK supply chain in light of the soon-to-be “new kid on the block”.

Both ports see themselves continuing to play a vital role in the UK supply chain come 2013, with neither seeing London Gateway taking the lion’s share of the market. As expected, both believe their location offers the best “gateway” to the UK.

But as Doug Morrison, Port Director ABP Southampton, puts it: “To some extent we are all right, and also all wrong. In the end it depends where the freight is going.”

Paul Davey, Head of Corporate Affairs at Hutchison Ports UK, believes Felixstowe will remain the busiest container port in the UK. “We don’t see the UK supply chain changing dramatically,” he says.

Big ships need to access the whole UK market, not just London, he adds, “and Felixstowe serves the whole of the UK.”

Commenting on London Gateway’s new logistics park he says freight from Felixstowe could find its way there. “I don’t think London Gateway will be the exclusive entry for any warehousing there. There is a role for port-centric logistics, but it is not the panacea for everything.”

He also doesn’t see Felixstowe’s role as the UK’s feeder hub port changing. “To be a hub, critical mass of volume is required. Even if London Gateway eventually develops to its full extent it will still be smaller than Felixstowe today, in terms of quay length, teu and cranes,” he says.

And Morrison believes Southampton will also continue to thrive post-2013. Its strategy is to upgrade Berths 201 and 202 to allow the world’s largest container vessels to dock. Pending planning consent, the upgrade is scheduled for 2013.

Southampton’s market is primarily the South-east and the Midlands, and up to 34% of freight is moved by rail. “I think business will grow – London Gateway and Felixstowe will have more of a bun fight,” says Morrison.

London Gateway, which will open with a capacity of 1.6 million teu, will create 700 construction jobs and 300 port jobs in the coming months. The project has already created more than 600 jobs since January 2010 when major construction started.

Moore says the aim is to move 30% of freight by rail and has plans to double-track the existing railway line to the Tilbury loop, and be operational by day-one.

And there are already discussions with shipping lines. Moore won’t reveal details but says commercial conversations are looking very positive.

In the end, Southampton’s Morrison believes, cost will be the deciding factor. “Productivity plays a part, but in these times it’s all about cost: it’s the cost of a box delivered to the end user, not just the port.

“The shipping lines will decide.”