The mother of all ports…

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A Superport is in the prcess of creation  in the North West. Liza Helps investigates.

Work has started on Peel Ports’ £300 million in-river deep sea container port Liverpool 2 – an integral part of the puzzle that makes up the ambitious multi billion pound Liverpool Superport in the North West, but can port centric development really work in the region?

It doesn’t seem possible driving along the ramshackle pot hole-laden road to Peel Ports’ Port of Liverpool headquarters on an unseasonably wintry day close to Easter. But Global Institute of Logistics chief executive officer Kieran Ring is of a more optimistic frame of mind. Talking at the CILT Conference on Logistics Clustering he says the plans have potential: “As fuel costs rise the need to move goods, domestically and internationally, far more efficiently becomes much more important than ever, both from an economic and an environmental viewpoint.”

Mark Basnett, executive director of Liverpool City Region LEP, a key partner in the development of the Superport agrees: “The trends of increased imports of consumer goods from low cost economies and export back to those economies, increased road transport costs and increased focus on more sustainable logistics for retailers and manufacturers, will drive business towards port centric and multi-modal logistics solutions close to large centres of population.”

Ring adds that when companies locate in the same place and share opportunities, synergies are created that can provide more efficient supply chain solutions than if the same companies were to work alone.

He points out that with globalisation the need for clustering at ports becomes paramount as more and more goods are imported around the globe. “The nearer you are to the port the better chance you have of keeping costs low.”

It is just that point that Stephen Carr, head of business development at Peel Ports Mersey (which operates Port of Liverpool and the Manchester Ship Canal) is keen to reiterate: “Currently 90 per cent of deep sea cargo enters the UK from the south, yet over 50 per cent of the UK container market is based in Birmingham northwards. Indeed 70 per cent of all goods that come within a 150 mile radius of the Port of Liverpool enter the UK via southern ports – with the on-going journey to the North of England by road and rail adding extra strain on the country’s overburdened transport networks and the environmental impact of unnecessary CO2 emissions.”

Richard Butcher chief executive officer of Stobart Estates agrees and notes: “The majority of containers spend most of their lives empty but someone, somewhere is paying for that – there are about a million empty containers a year being moved out of the North West to the Southern Ports at a cost of £400 per container: that’s £400 million of waste. Any cuts to that cost must be welcomed.”

Carr goes on: “Liverpool is the most centrally positioned deep-sea port in the UK, meaning it is ideally situated to serve all cargo bound for Northern Britain by optimising the supply chain.
“By looking at the integrated ‘Ship-to-Door’ logistics, we not only optimise the transport leg from port to store, but also offer an efficient onward transport journey as Liverpool is closest to the consumer.”

According to the Liverpool LEP 17 million people live within two hours’ drive of Liverpool making it the largest population centre outside London.

Razi Khan, a buyer and supply chain manager at Typhoo, imports tea to the UK from around the globe. He says that by using the Port of Liverpool, as opposed to the southern UK ports, Typhoo has been able to make substantial cost savings and meet its targets for reducing carbon emissions.

Khan says: “We save around £500/40ft by bringing our cargo into the UK through Liverpool, including customs and storage. In 2010 we imported just 20 per cent of our tea through Liverpool. We currently have around 60 per cent coming through the port, and our target is to have 100 per cent entering the UK market through the Port of Liverpool within the next five years.”

Historically, Typhoo Tea routed 95 per cent of its cargo through southern UK ports and then road hauled to the North West. By importing through the Port of Liverpool they have significantly reduced road miles and therefore their carbon emissions as well as saved money. Peel Ports’ Liverpool 2 scheme is part of a wider £2 billion investment in the region which will see a transformation of the way logistics is carried out in the country or so its proponents boast.

Carr says: “There has already been an incremental growth in market share in 2009 to 2012 Liverpool had a one per cent market share – equivalent of 40-50,000 containers or 70,000 TEUs. Although the terminal at Liverpool 2 will open in 2015, it won’t be up to full run rate capacity until 2020/21 but in that seven years it is expected to ramp up and broadly double the throughput of the port.

“But, it is not just the increase in market share. Peel Ports estimates show that by 2030 container traffic through the Port of Liverpool could experience a modal shift away from road haulage with five per cent of freight being taken by rail, ten per cent via the Manchester Ship Canal and 15 per cent by coastal shipping.”

In 2012 the figures were less than one per cent by rail, five per cent by Manchester Ship Canal and just 2.5 per cent by coastal shipping.

Construction work on Peel Ports’ Liverpool 2 project will create a 16.5 metre berthing pocket allowing two vessels of up to 13,500 TEU at a time to call directly at the port when it becomes operational in 2015.

The scheme will see the construction of an 854-metre quay wall and the creation of 44 acres of land for the container terminal which will be served by ship to shore quay cranes and modern cantilever rail mounted gantry cranes (CRMGs). It will be one of the UK’s most modern container terminals.

Douglas Coleman, programme director for the Liverpool 2 project, explains: “CRMGs are a highly-efficient use of space. We have given this great thought, and the adoption of CRMG technology also means that ships are going to be serviced very quickly. They are more modern than our current straddle carrier operation, and are a high-technology solution. This will be one of the UK’s most modern container terminals, and that includes the crane technology.”

The sheer scale of the Liverpool 2 project can be shown by the quantities of materials which are needed in the construction phase – with the quay wall requiring 30,000 cubic metres of concrete, 15,000 metres of steel piles and 6100 metres of new crane rails. Dredging of the berthing pocket will remove around one million cubic metres of material from the Mersey; and almost three million cubic metres of infill material will be required to create the new container area.

Associated infrastructure will require the construction of 3,500 metres of new road, 230,000 sq metres of surfacing and 2500 metres of fencing.

Liverpool 2 is the key project in the Mersey Ports Masterplan, the 20-year vision for growth and future developments at the Port of Liverpool and on the Manchester Ship Canal – launched by Peel Ports in 2010.

Liverpool 2 will connect directly to a number of port centric logistics hubs along the Manchester Ship Canal via barge – resulting in the development of the UK’s first “green logistics hub” which will reduce costs, congestion and carbon footprint for businesses located in the North West of England, serving the North of the UK.

However, the £2 billion Superport project is not just about Liverpool 2 and the Manchester Ship Canal. Overall the project brings together 3MG (Mersey Multi-Modal Gateway), Port of Liverpool and Liverpool John Lennon Airport as well as Liverpool 2 and the Manchester Ship Canal.

Analysts Amion Consulting have forecast the potential for more than 21,000 new jobs and an additional £6.1 billion GVA (gross value added – a measure of economic output) by 2020, then nearly 30,000 jobs and another £18.3 billion of GVA by 2030.

But why has this all come about now? Much of it is about the economy and the government’s attempts to get it moving. This includes the mass injection of cash to pump prime infrastructure works throughout the country and the revision of the planning process.

 Butcher says: “The regeneration of brownfield sites has been helped by the revision of the planning process. When you look at the North West, land is cheaper than Midlands and the South – land costs, ownership and rents. Then, as you extrapolate, rates are lower. In addition labour rates are lower too.

Total package

“You have got to look at the total logistics package it is not just about the rental cost of the buildings – they are not the be all and end all of the deal. You have to put everything in the mix. The Golden Triangle may look good but you have got to look at how to service your market. The companies that win will be able to combine their business (online and traditional) with the lowest possible distribution cost.”

As well as the basic economics another reason why things are moving in the North West today has to be that for the first time in their history the Manchester Ship Canal and the Port of Liverpool are owned by the one company – Peel Ports.

“Up until recently,” says Stephen Carr, head of business development at Peel Ports, “the two entities were in competition with each other. Originally the Manchester Ship Canal was built by the traders of Manchester to bypass Liverpool and when one built something the other would try to outmatch it – it was a war so to speak.”

“We can now synergise them. That enables us now to hopefully punch our weight.”

The canal is proving extremely popular with customers and Peel has had to invest in a larger ship just to keep up with demand. The new ship, MV Coastal Deniz, can carry 260 containers – 60 per cent more than its previous vessel Monica.

Stephen Carr says: “Deniz will move 20,000 containers in 2013. In 2009 we handled 3,000 containers, in 2011 this rose to 10,000 containers and in 2012 it carried 15,000 containers.
“Seven million tonnes of dry bulk cargo and petrol chemicals are also shipped annually.”

Rail links- Rail is key to multi-modal gateway

The rail terminal is key to Stobart Estates’ 1.4 million sq ft Stobart Park at 3MG in Widnes says Stobart Estates’ chief executive Richard Butcher.

“Many developers say they have rail connectivity, either possibly or in the future, but at Stobart Park it is alive and kicking with at present seven freight trains a day and a capacity to more than double that.”

Indeed it is a very slick operation directly linked to the West Coast Main Line handling up to 1,100 vehicles a day with a turnaround time of just 12 minutes.

It has the capacity to securely store 6,000 containers which are shifted around using four rail mounted cranes with automated container positional and recovery system and an advanced GPS and tracking system.

It looks mightily impressive and indeed it impressed Tesco so much so that they increased their presence on the park from an initial 628,000 sq ft to more than 770,000 sq ft.  Stobart Estates secured detailed planning for a 1 million sq ft warehouse with 40m eaves on the second phase of the development which is available on a build-to-suit basis through letting agents Jones Lang LaSalle and Cushman & Wakefield.

As an added incentive to prospective tenants on the site Stobart is also pushing ahead with a 20Mw biomass plant run on recycled wood.

“To get an idea of the power that it can produce,” says Butcher, “Tesco’s current electric needs at the park for its chilled store requires just 2.5Mw a year so there is more than enough power to supply potential occupier enquiries.”

Stobart calculates the potential savings at 35p per sq ft per year by having this green energy supply based on a one million sq ft ambient building that equates to £350,000 a year or £7 million saving in running costs on a 20 year lease.

The park is part of a larger development in conjunction with Halton Council known as the Mersey Multi Modal Gateway (3MG) that could see the development of up to 3.5 million sq ft of warehousing, 5,000 new jobs and the reclamation of 200 acres of contaminated land.

Earlier this year, Mersey Gateway was identified as one of the UK government’s Top 40 priority projects in the National Infrastructure Plan and it has been recognised by KPMG as one of the Top 100 infrastructure projects around the globe. 

Its centrepiece is a new six-lane toll bridge over the River Mersey linking Widnes to Runcorn.

Waterways- Cereal link via the canal

Kellogg’s has increased the volume of breakfast cereals it transports using Peel Ports’ “Green highway network” – on the Manchester Ship Canal container shuttle service.

The Ship Canal shuttle service is considered one of the most environmentally-friendly bulk logistics solution on offer in the UK, and already serves other major retail names such as Princes Foods, Kingsland Wine, Tesco, Typhoo, and Regatta.

Approximately 2,500 TEU of Kellogg’s cereal product will be transported via the ship canal between the company’s Manchester, Ireland and Iberia distribution hubs in 2013. The containerised product is transhipped at the Port of Liverpool on to a coastal feeder service to serve the Irish and Spanish markets.

In what is an added value logistics solution for the company, Kellogg’s has also taken advantage of the Port of Liverpool’s flexible ‘on demand’ warehousing offering. The port-centric warehousing capacity further increases efficiency of the company’s supply chain, with storage for up to 7,000 pallets of cereal product available at the Port of Liverpool when required.

Paul Blears, UK and Republic of Ireland export freight operations manager of Kellogg’s in Manchester, explains: “In general, many of our customers don’t hold stocks of cornflakes, so next day delivery is important, making the Manchester Ship Canal of little interest to us. But this has changed. Already, we have one customer in Dublin (Tesco) which requires between four and five 45ft HC’s a week, which wants us to use the environmentally friendly waterway.

“We were hesitant at first, but since trying the waterway, we have been very impressed with its reliability. There have been no nasty surprises. Truck deliveries to/from Irlam are very quick, and transit times are respected.”

Kellogg’s use of the shuttle service will equate to an 85 per cent reduction in road miles for the supply chain: a reduction of 40,000 road miles and 61 tonnes of CO2 in the coming year.

Paul McCoy, business development manager for Containers and Barge at Peel Ports said: “We have developed a strong relationship with Kellogg’s and have a comprehensive understanding of their logistics needs and aspirations.

“Peel Ports is developing a series of mini ports and multi-modal logistics hubs at various locations along the Manchester Ship Canal, which means we can bring containerised products inland to exactly where the customer wants it.”

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