Sunday 23rd Oct 2016 - Logistics Manager

Logistics on the edge

Portcentric logistics might be fashionable but is it the right approach for everyone? Malory Davies investigates.

The portcentric logistics concept got a big push forward in November with the opening of London Gateway, the new container port and logistics park at the mouth of the Thames. First scheduled arrival was the MOL Caledon from South Africa carrying everything from fruit to motor parts.

Close proximity to the capital gives London Gateway an advantage over Felixstowe and Southampton. But its competitors are not just lying back and letting it take away their business.

Felixstowe, which handles 40 per cent of all containers moved through the UK, promotes itself as Britain’s best connected port, and last summer opened its third rail terminal doubling rail freight capacity – and by taking traffic off the road also improving the capacity situation there.

It also commissioned some research from MDS Transmodal which suggested that it offered a cheaper gateway into the UK than did London Gateway. The research, which was published by the Daily Telegraph (12 August) said that inland transport costs per container were £9 less for Felixstowe. MDS also suggested that there would be an additional cost of £17 per container for diversion from the main shipping lanes.

Southampton is investing £150m in expanding its container terminal. The new 500m quay, known as SCT5, is due to open this year giving the port the capacity to handle the latest generation of ultra large container vessels.

It’s not for nothing that Northampton has become the distribution centre of the country – that area is the middle of the country in transport terms. So there has to be good reason why you would use a port at the edge of the country instead.

Wincanton Containers is a major player in the movement of containers from the ports. Managing director Ian Wilson sees portcentric operations as part of a broader product offering.

There is nothing new about portcentric, he says. Companies have had facilities for devanning containers at ports since the 1960s. What really brought portcentric to the fore was the growing congestion at the major deep sea container ports in the face of the rapid growth in imports.

He highlights the development of portcentric at Teesside, and sees strong potential at London Gateway. Its location close to London makes it attractive as an import centre.

The rising cost of transport also means that companies have to look at new ways to control supply chain costs.

Much of the development of portcentric facilities has been on a dedicated basis. However, he says, Wincanton is interested in the possibilities of portcentric on a shared user basis.

But, he emphasises that portcentric is not the best solution for everyone. Off-quay storage is another option. Wilson points out that off quay storage has a number of advantages. Cost is an obvious advantage – leaving containers on the quay can be very expensive. In addition, off quay storage can be closer to the final destination enabling short lead time call-off for urgently required products.

Wincanton’s flagship container storage site at Alconbury near Huntingdon stores over 6,000 containers across an 19 acre facility. The site operates 24/7 to meet demand. It also operates a container storage facility at Greenham Common.

B&Q has a large number of globally sourced SKUs. It uses Wincanton to provide a port to distribution centre service which involves handling some 15,000 containers a week.

About 25 per cent of inbound container traffic is transported by rail to strategic railheads. Wincanton also uses off-quay storage sites and a quay evacuation management service to save on quay rent charges. Efficient transport planning has enabled B&Q’s core fleet to deliver more than 30 per cent of all inbound containers.

In contrast, Southampton-based Import Services argues that portcentric provides the best route to market for an international supply chain.

Client services director Mike Thomas says: “In our industry to deliver the right product, to the right place, on time, in the right format and cost effectively, requires planning and systematic control of product movement along the supply chain. This typically involves products sourced from manufacturers located in the Far East and processed for delivery to retailers and consumers in the UK, Eire and across Continental Europe.

“Our logistics operations are currently all based in Southampton, the most efficient container port in Europe and the first port of call for Far East trade to Northern Europe.

“Our clients are suppliers both to retailers and direct to consumer. All are facing the challenge of tighter supply chains, with shrinking lead times demanding an increased frequency of smaller value orders and the logistical complexity involved in multi-channel retailing,’’ says Thomas.

In this context he says the ability to move products swiftly from container ship to port based distribution centres for processing, is of equal importance to the speed of information flow.

The portcentric logistics model is superseding the traditional pattern of moving goods to an inland distribution centre and returning the empty container to port. The traditional supply chain is now too costly in time, empty running miles and carbon emissions.

“Furthermore the economics of distribution using our retailers’ back-haul services, load consolidation, pallet and parcel networks, mean distribution from the port direct to the point of demand is the optimum solution; this compelling business case enables hub distribution direct from the port, to UK and Continental European consumers.

“Our bonded warehouses also allow our clients to defer their VAT and duty payments until products are sold, which reduces working capital and improves cash-flow significantly,’’ says Thomas.

“The ability to pre-retail imported product at our port warehouses and process orders for domestic distribution or re-export, is giving our clients options to operate successfully in the new world of multi channel retailing,” he says.

Deep development

Felixstowe and Southampton have come to dominate the deep-sea container market, as ports like Liverpool have struggled to take the increasingly large container ships. At the moment Liverpool is limited to 4,500 TEU ships, but that is going to change with the development of Liverpool2 – a deep water container terminal in the Mersey.

The £300m terminal is due to open for business in 2015. It will be capable of allowing two13,500 TEU ships to dock simultaneously. Mark Whitworth, chief executive officer of Peel Ports, says: “Our investment in Liverpool2 will enable deep sea vessels to call directly at the most centrally positioned port in the UK, allowing shippers to access a market of over 35 million consumers within 150 miles.”

Much of the growth in portcentric has been driven by PD Ports, which last month became the first feeder port to be served by the London Gateway.

BG Freight Line vessel, Cetus J, berthed at DP World’s London Gateway before making her scheduled visit to Teesport. Cetus J is the first feeder vessel to berth at London Gateway making Teesport the first port to receive a vessel of this type from the London based port.

Geoff Lippitt, PD Ports’ business development director, said: “We are really pleased to see that the first feeder vessel to sail from London Gateway made Teesport its first port of call. One of the strengths of Teesport is the range and coverage of feeder services and we will continue to build on this and expand in the future.”

Teesport has more than 20 feeder calls a week connecting to the major hub ports of Europe.

Last year PD Ports Group launched PD Portcentric Logistics to highlight the group’s portcentric logistics capabilities and showcase the big name businesses already taking advantage of the offering.

The portcentric logistics operation at Teesport has seen rapid growth in recent years, with major contracts including household names such as Asda, Tesco and Taylors of Harrogate.

The brand launch includes the launch of the “project P” campaign, which will champion the cause of portcentric logistics and help explain the benefits to business and the wider community, under the premise of “making logistics logical.”