Is the cure-all for port centric superiority aligned to who will secure a deep sea berth first? Liza Helps reports.
In an increasingly e-commerce driven world the demands for ever faster supply chain solutions are growing. Forrester Research predicts that by 2015 internet shopping will be worth US$184 billion, a massive 16 per cent year-on-year growth.
Additionally as fuel costs rise the need to move goods, domestically and internationally, far more efficiently becomes more important than ever, both from an economic and an environmental viewpoint.
Tim Davies of Colliers International says: “There are limits to the levels of freight which can be brought into the UK by rail and we are already seeing many airports straining to cope with their present capacity, let alone the freight projections for the new few decades,” he said.
“In reality the only realistic solution is to ensure our ports are geared up to cope with the lion’s share of freight arriving in the UK.”
The majority of goods now come from low cost economies via container shipping and Colliers International forecasts the continued growth in container shipping passing through Europe’s ports is set to outstrip overall growth for the foreseeable future.
As a result shipping lines are introducing ever-larger ships on the main trade routes in particular those from the Far East to reduce costs and save fuel. Ultra-large containers carriers (ULCC) are predicted to account for more than half of the capacity of the world’s total container fleet by 2015. In order for ports in the UK to compete they will have to be able to handle these ULCCs.
Those ports which can secure deep water berths first will be able to gain the upper hand in negotiations with shipping lines looking to deliver containers to the UK. Obviously a ULCC would prefer not to dock in more than one port for cost efficiency reasons.
So how does portcentric logistics fit in with increased container traffic? Simply put, the more goods coming into a port, the more opportunities there are for portcentric logistics to work efficiently.
A fact that Marks & Spencer was quick to draw upon when deciding to locate its 900,000 sq ft distribution centre at DP World’s £1.5 billion London Gateway port scheme recently. Simon Moore, chief executive, DP World London Gateway, says: “By bringing ships carrying millions of products closer to the point of consumption we will help M&S to shorten its supply chain.”
While London Gateway can plunge ahead with construction having the funds to do so from DP World other port authorities have to take a different view.
Covering 2,600 acres, Bristol Port was privatised in 1991 since then more than £450 million has been invested to make it one of the most technologically advanced ports in Europe. It has natural deep water and handles around one quarter of all the jet fuel imported into the UK, one quarter of the animal feed and is the UK’s leading car import terminal.
It currently handles 1.5 million TEUs, over 12 million tonnes of cargo a year and can accommodate vessels up to 130,000 dwt. The Bristol Port Company has plans for a £600 million deep sea container terminal that would double its annual TEU and would be able to handle three 400m vessels at a time. All the key permissions are in place to go ahead with this project but The Bristol Port Company is waiting for the global container market to improve before starting work. Once construction starts, the terminal is expected be ready in about three years.
For some logistics experts this could put Bristol at a competitive disadvantage compared to other ports. Jeremy Hughes of BNP Paribas Real Estate says: “One could question the speed of development though this has not held back distribution development in the area.”
Indeed Bristol has been a magnet for RDC development for the major retailers in the UK in recent years due to its geographical location. Hughes remarks that with such a big investment in traditional distribution centres it is unlikely that the same retailers would reinvest in the area to pursue specifically portcentric strategies along the same lines as M&S at London Gateway.
Philip Cranstone of DTZ remarks that if the development had gone ahead then perhaps it might have been a different story for specific portcentric development at Bristol “There is possibly more pent up demand in the market.”
Paul Hobbs of GVA agrees: “There is significant potential but it requires the investment in the port which will flow when trade recovers. Only when the larger boats can jetty in the Severn will the area achieve its full potential.”
While The Bristol Port Company waits it out, Associated British Ports has grasped the nettle and gone forward with its £150 million plan to upgrade its deep water berths at its Southampton Container Port which is operated by DP World Southampton.
ABP port director Southampton Doug Morrison says: “As shipping gets bigger, the port needs to adapt to retain its place at the forefront of the industry and to continue to meet our clients’ needs. The number of large vessels in operation has increased considerably in recent years, and we are now seeing regular calls by 13,000 TEU vessels.”
The proposal is to deepen berths 201 and 202 in the Western Docks to enable the Port to accommodate the current generation of large container vessels at their loaded draught. The berths were the UK’s first container berths but in recent years have been too shallow to accommodate modern ships.
The increase in the length of container ships has meant that the current deep-sea berths at the container terminal (Berths 204 to 207) can no longer accommodate four large vessels simultaneously. By combining berths 201 and 202 to provide approximately 500m of quay with 16m of water depth alongside, the effective capacity of Southampton’s container terminal will be restored to accommodate four large vessels.
In addition to this a further £26 million has been invested in four new ship-to-shore gantry cranes which will be able to handle ULCCs of 24 containers wide and will have a lift capacity of 65 tonnes.
Morrison says: “It’s imperative that we have state of the art cranes on our new berth to allow short turnaround times for these vessels.”
After the new cranes are delivered and assembled on site, the new berth is expected to be operational in early 2014.
But effective portcentric logistics is not just about securing ULCCs and cranes, there is also the issue of effective means of onward distribution and of course land to develop portcentric warehousing in the future.
Southampton has direct rail links to the main railway network and is less than two miles from the M27 motorway. The railway line from Southampton has recently been upgraded to a loading gauge of W10, allowing it to handle the taller containers now in widespread use, on the route between the port and the rail freight terminal at Hams Hall just outside Birmingham which is owned and operated by Associated British Ports.
Last year DB Schenker relocated to larger offices at Southampton to meet increasing demand to move containers by rail. Over 60,000 containers travelling through the port were conveyed on DB Schenker Rail freight trains.
However on the issue of land for development the port is constrained. Matthew Popplet of Jones Lang LaSalle says: “The way Southampton works everything goes by rail freight or by road to the Midlands.”
It totals some 726 acres with a further 800 acres in a strategic land reserve in Dibden which has yet to come on line. Indeed in Port of Southampton’s Masterplan for 2009 – 2030, the company did not envisage that that would happen much before 2020. With such constraints the development of large scale portcentric warehousing will be a challenge in the short to medium term. There are other options for the docks such as Oceanic Estates’ 140 acre Marchwood Industrial Park on the other side of Southampton Water. Popplet says: “[This] is a cheaper alternative and its growth can be directly linked to the success of the port.”
Local warehouse and distribution company Harris Transport recently took a long lease on a 109,588 sq ft 12m high bay warehouse there for use in conjunction with port related logistics.
Over in Bristol the opposite is true – there is plenty of land for the immediate development of large scale portcentric warehousing and issues regarding rail freight look to be sorted with the news that Central Park owner Delta Properties, trading as Severnside Distribution, and joint venture partner Roxhill, are pushing forward with a new £10 million rail freight terminal which will be able to take up to seven trains a day. Michael Shebson of Delta Properties says: “We are still in discussions with Network Rail regarding signalling etc but it is hoped that the terminal will be directly linked with the port via the Severn Beach Line.”
The connection would be W8 gauge and linked in with the national rail network. The 640 acre Central Park scheme would be able to offer a rail connected warehouse of up to 1.3 million sq ft.
Case study- Import Services sees savings
Established 30 years ago Import Services has in recent years focused on portcentric logistics.
Two years ago it launched a dedicated 40,000 pallet facility which it now intends to extend by a further 12,000 pallet spaces.
Shareholder and client services director Mike Thomas is an exponent of portcentric logistics: “There are savings in time, cost and carbon [with portcentric logistics] and the reason for its rapid growth is because e-commerce is shrinking timelines for retailers and suppliers to fulfil orders. They need stock in the supply chain and the optimum route to market is portcentric.”
Goods come straight from Southampton and are offloaded direct into the warehouse where Import Services process the stock into a form that can go direct to the RDC or DC, the store and even the end consumer.
A huge part of the business is high volume order processing readying stock for market and bespoke filling of consumer display units and free standing display units with anything from the latest toy craze, golf equipment to electronics and clothes.
The company has just secured a contract with MySmartBuy.com to provide supply chain services from product source, to home delivery.
MySmartBuy.com managing director Mel Eden, says: “We have been searching for the right logistics partner to process our current base of 140,000 orders a year and provide the right services to help us grow to the next level.”
“Import Services ticks all the boxes for us in terms of capability to effectively run supply chain shipping from the Far East, warehouse our stock at the container port, manage multi-channel order processing, provide high volume pick and pack, plus track and trace delivery, direct to our customer base.”
Thomas says: “[The company] is consolidating e-commerce activities in one of our three port-based distribution centres, which allows us to pool expertise and operations to the benefit of our clients.
“Holding stock under bond at the container port and processing for direct delivery to the consumer, is the optimum supply chain for e-commerce businesses and MySmartBuy.Com have recognised swiftly the business edge we offer,” he says.
Import Services runs an integrated web enabled warehouse system and has grown £1 million a year-on-year consistently over the past five years.
Thomas says: “We are expanding in a measured controlled way. The retention of our clients is paramount to us and we take a lot of time and effort and indeed pleasure in looking after clients and the new businesses joining us.”