Sunday 23rd Oct 2016 - Logistics Manager

Gateway to the North

Middlesbrough is the home of PD Teesport (PDT), a northern port and formerly known as the Tees & Hartlepool Port Authority located in the Tees Valley 4km from the North Sea. The port is a deep-water, lock-free tidal facility which allows access for international Panamax-sized cargo vessels, the largest freighters that can traverse the Atlantic-Pacific Panama Canal in Central America.

Presently, the port employs 500 people and is the statutory harbour authority for the ports of Tees and Hartlepool, responsible for the safe navigation of vessels, dredging, and pilotage and river conservancy for the Tees Estuary. Combined, the ports of Tees and Hartlepool are among the UK’s top three ports, handling more than 50 million tonnes of domestic and international cargo per year, 8% of UK port traffic through more than 6,000 ship arrivals.

The ports contain a major European and international freight hub. Bulk cargo at Teesport accounts for 70% of the port’s volume with a container throughput of more than 180,000 teus (20ft equivalent units) a year. The recent announcement by steel manufacturer Corus is seen as good news for the port, with anticipated exports of steel going up from one million tonnes a year to nearer 2.7 million tonnes by 2007.

During recent years PDT’s management identified several central commercial pressures facing the port. One was how to maintain an international competitive edge that delivered both growth and shareholder value. Like other European hub facilities, PDT needed to increase cargo throughput and maximise use of space, and in an environmentally sympathetic way which made the most of finite expansion space. There was also a need to drive down costs, improve forecasting, maintain and develop margins and manage labour efficiently within the boundaries of the forthcoming EU Working Time Directive (WDT).

There were also the intermodal trans-shipment issues driven by the pressures on regional and national transport networks. All these have to be considered within the wider context of global deregulation and a constantly changing regulatory framework.

While it is accepted that such pressures are common to the industry PDT responded by putting in place a new computer system to run all aspects of the port from container movements to workers hours. The system is now up and running. The Teesport Container Terminal (TCT) at the port has been fully automated since 1999, with the software managing all ship-to shore, shore-to-ship and intermodal trans-shipment movements into and out of the port facility. With so many of the TCT’s daily operations automated, the port has the capability to run a major facility with an absolute minimum of people, so keeping labour costs down.

Now that the port has a robust operational framework in place PDT is not resting on its laurels, being aware that there are challenges, and opportunities to exploit, ahead – in particular re-positioning the port in the growing intermodal container market.

In order to do so, the company is not short on ideas and initiatives. To that end, PDT is taking steps towards creating a new logistics gateway to the North and putting its Teesside port to the forefront of change.

Feeder ships

Last November, PDT marked the first anniversary of the opening of its £20M second container terminal (TCT2). The port says it has benefited particularly from a shift towards short-sea feedering to meet the international supply chain demands of northern importers and exporters. According to the company, cranes are operating at consistent 27-28 moves per crane every hour, ensuring that vehicle turnaround time is 25 minutes.

It is this “30-30 Vision” – 30 minutes crane time / 30 minutes turnaround – that is particularly appealing to customers. The company points out that with its new facilities and plentiful space at the port, shippers and shipping lines are offered fast turnaround times of both trucks and ships. When this is coupled with frequent intermodal rail services into the North-west of England and Scotland, an attractive proposition is made for customers to remodel traditional supply chains.

The company maintains that the use of feeder ships to bring cargo into northern ports makes good sense. This can be via feedering round the UK to Teesport from ports such as Southampton, Felixstowe or feedering from mainland European ports including Rotterdam, Zeebrugge, Antwerp and Le Harve. PDT has already attracted French shipping company CMA-CGM to bring its feeder ships up to Teesport to serve the north of the country.

Concorde Container Line (CCL) also offers a weekly feeder service into Teesport from Antwerp and to Rotterdam, while K Line – its UK clients comprise several major retailers – recently announced a revitalised weekly service to Teesport, which includes the ability to link Teesport with deep-sea terminals in both Felixstowe and Rotterdam. Other shipping companies are providing services to the Baltic States.

Container handling

However, PDT wants to go further and has announced ambitious plans to develop a new deep-sea container port on its existing Teesport site. The rationale behind this move makes commercial sense.

From a global perspective, PDT maintains that strong growth of manufacturing in the Far East has led to a huge increase in the volume of ship and cargo movements from East to West, especially container volumes. Also, ship sizes are increasing to accommodate more exports and larger containers.

The size of containers used is also increasing, mainly towards the 9ft 6in high cube, in order to accommodate this export growth more efficiently. These factors combine to produce an indisputable requirement for increased UK and mainland Europe port capabilities both in terms of better handling processes and, in particular, deep-sea capacities to accommodate the new bigger ships, each carrying more than 8,000-teu containers.

In UK ports container handling is the fastest growing segment, in line with global demand. In the past ten years the volume of containers handled by UK ports has almost doubled, and there is a consensus that more and larger capacity is now required. Equally, deep-sea port capacity is necessary for the UK to remain competitive. It is argued that without substantial investment in capabilities and capacity to handle deep-sea shipping the UK could lose out to European competitors, such as Rotterdam or Antwerp. Statistics indicate that on the basis of container volumes handled European ports are growing at a quicker rate that those in the UK.

Globally, during the past decade container traffic has risen by an annual average of more than 9%. The global fleet of container ships is set to increase by 40% between now and 2008, while the volume of container traffic is forecast to double by 2014. A recent study by Drewry Shipping Consultants and Germany’s HypoVereinsbank (HVB) reported that the worldwide port infrastructure is less and less able to keep pace with the growth in container traffic volumes. The problem of overloading and congestion has now reached the major international ports of industrialised countries, including the UK.

The situation has negative consequences for both global and national trade. Port terminal shortage problems become exacerbated by shortcomings in the shore side infrastructure such as road haulage routes and potential deficiencies in rail transport. This is as applicable to UK ports, as elsewhere. Indeed, continual concern has been expressed about a lack of a UK National Ports policy on expansion, taking pressure off existing ports and not jeopardising the future of the country’s maritime trade.

PDT’s plans have to be seen within such a context. The UK’s main container handling ports are all based in the south of England, mainly Southampton, Felixstowe and Thamesport. Over the past few years there have been frequent complaints about overcrowding and congestion at these ports, with long dwell time of unloaded / stored containers, resulting in delays for hauliers.

According to PDT, exporters to the UK do not place great weight on the exact port location. So far as exporters are concerned the most important factors include:

lPort capacity.

lWaiting time for berthing.

lShip turnaround on loading and loading.

Bearing these in mind and the experience with the southern ports, PDT maintains that its port on Teesside has many advantages and strengths, which can be built upon for the future. For example, more than two million of the containers entering the UK each year are destined for northern locations. The present situation of container ships being served by southern ports necessitates longer road journeys to deliver goods to the north of England, creating congestion and pollution and use of finite fuel.

Bringing containers into the South for road transfer to northern locations adds an average 150 miles per container journey. In contrast shipping creates less pollution than other forms of transport, and is a more sustainable mode. The total CO2 emitted by water transport equates to 25g per tonne-km, while rails emits 41g and road 160g per tonne-km.

Furthermore, the Government’s regional strategy report published last year, The Northern Way, recommended not only a National Ports policy, but the opportunity to assess the potential of the North’s ports to take pressure off the road network and to act as a channel to wider continental freight routes. The aim of the The Northern Way is to establish the North as an area of economic opportunity and development, and this philosophy presents new potential opportunities for Teesside.

Increasingly, it is recognised that the port is one of the area’s key strengths. For example, at the port there is good access to the local dual carriageways without congestion, coupled with speedy truck turnaround time at the port. Rail access is also good, with a number of freight trains already transiting the port from other UK locations, though gauge enhancement is an issue that needs to be addressed. From the perspective of large container ships the port claims many advantages (see Box 1).

Exploiting growth

PDT’s commitment to creating a deep-sea container port at Teesport, requiring more than £200M investment, not only capitalises on the global scene but is also an investment in the region bringing many benefits in its wake. The new deep-sea port assists towards ensuring that the UK is in a position to exploit the growing global shipping market. This action also ensures that the UK will be on a level playing field with European competitors, meeting customer’s future requirements.

Additionally, the existing port and planned development helps towards attracting retailers and others to construct import/distribution centres in the Tees area. There is sufficient land to develop up to six distribution centres at Teesport, with interest already from one large retailer about to put a new distribution centre in place.

The deepwater sea container port development would create between 200-300 new dock-related jobs, in addition to a significant number of indirect jobs within the port – the logistics and shipping sectors estimate at between 1,000 and 1,500. Moreover, the land capacity to build the six distribution centres would provide up to a further 3,000 new jobs.

According to PDT the expanded ports facilities would mean more reliable berthing availability for shipping lines. The natural deep water with no lock system means reliable and speedy ship turnaround times. Furthermore, the availability of land and space means cheaper container storage and cheaper building costs.

Traditionally, the cluster of industrial activities that centred on Middlesbrough and Teesside consisted of heavy engineering, chemicals, coal and steel. The surrounding land at Teesport is brownfield, which can only be used for industrial and warehousing development. Creating a logistics gateway to the North at Teesside would remove more than one million containers from the UK’s roads, which in turn saves a huge number of food miles per annum and reduces traffic congestion. PDT points out that its plans to expand the port facilities, in phased developments, will not place undue pressure on the local roads infrastructure or to overheating, but rather assist in regenerating the local region.

Figures published in December 2004 showed that the unemployment rate in the Tees Valley area was higher than that of the UK, at 3.4% against 2.25% respectively. PDT points out that the availability of labour can result in savings. It has been estimated that for a logistics company employing 350 staff, at savings of £1.50 per hour will reduce wage costs by £1M a year. Warehouse rental or building costs and storage space are also much lower in comparison to those in the South.

The possibility of an expanded and modern port facility at Teesside, coupled with cheaper land and an available and cheaper labour raises the competitive stakes in Britain’s maritime container market. The fact that the southern ports continue to encounter planning difficulties for their expansion plans, while those in the north are being officially encouraged at a UK and European level is a factor the market will be watching closely. n

Frank Worsford works in the transport studies group at the University of Westminster.