UK Ports are undergoing a renaissance and not just in terms of the number of ships coming in – there is also a move to develop facilities at the ports and bring warehousing portside.
Only a few years ago this would have been considered a total waste, as many warehouse operators tend to think that by locating to a port means reducing the efficiency of the facility because one side will always face the sea where there are no customers.
However, increased globalisation means that there are more goods coming into and leaving the UK than ever before and in many cases a portside warehouse is just the ticket for occupiers concerned with both cost and the ever-growing demand for more sustainable distribution.
With nearly 95 per cent of the UK’s imports arriving by sea, goods imported tend to have a long and tortuous journey from the port to a warehouse somewhere in the Midlands where the containers are broken up and goods sorted into smaller deliveries for onward delivery to yet another warehouse for distribution, or in a few cases for sale in shops and supermarkets.
But there is another way; something termed Port centric logistics where the containers are unpacked within the Port itself with goods packed in the most efficient way for onward distribution, usually by pallet on curtainsiders.
Developer Gazeley says: “Port centric logistics is challenging the traditional model by offering a supply chain solution for goods arriving at the port and enables whole sections of the supply chain to be removed resulting in faster distribution at lower operational cost.”
One retailer to take this on board has been Asda, which working with PD Ports in 2005 opened a £30m portside warehouse in Teesside. Asda built its own 350,000 sq ft warehouse on the bonded area within the port, and directs its UK-bound containers of non-food products from the Far East to Teesport. Ian Bowles, environment manager at Asda, says: “We cut a further 1.5m road miles by shipping goods directly to the North by sea, rather than via southern ports like Felixstowe.”
As an added benefit, as the entire Asda development is within a bonded area of the port, import duty and VAT payable on goods are deferred while stocks are held there, reducing costs and tied-up capital by up to 22 per cent.
The bonded area also simplifies matters as it can be used as a single point of contact for imported goods and single-point handling for Revenue and Customs. Another benefit of the bonded area is that trucks can use red diesel on the private roads within the area boundary.
Based on the success of the Asda model, PD Ports recently announced that it has submitted plans to create a new import centre at Tees Dock in Redcar. The plans are for a 1.2 million sq ft regional import centre to be located on 68 acres of PD Ports’s land at Tees Dock.
The new building, should it go ahead, could create over 800 new jobs over the next two years, plus several hundred construction jobs during this period. There would be car parking spaces for 800 staff as well as lorry parking spaces for up to 528 vehicles. This planned new import centre complex will be built on brown-field land that is currently undeveloped within PD Port’s 700-acre Tees Dock estate.
This is in addition to the operator’s more ambitious plans for the port, which would see the development of new £300 million deep-sea container terminal at Teesport, known as the Northern Gateway Container Terminal. According to PD Ports: “The plans envisage the construction of a 1,000m river-fronted terminal, with an annual capacity of in excess of 1.5 million teu, capable, due to its deep water, of handling container vessels originating from the Far East.”
The project could bring more than 5,500 new jobs to the area. Redcar and Cleveland Council has already given the project the go ahead and since there are now no objections PD Ports expect to receive approval of the Harbour Revision Order for the necessary seaward works from the Department for Transport by the end of June this year.
David Robinson, group chief executive officer of PD Ports, says the new import centre ,which will be three times the size of the one built by Asda, will be operated by another UK retailer which has ambitious plans for improving its supply chain for goods into their northern stores. The investment in constructing the centre will be over £50m.
“Once we have achieved successful planning approval and subject to successful completion of negotiations with the retailer, we hope to open the first part of the new import centre by Autumn 2008, creating hundreds of construction jobs during 2008. Once fully operational in 2009, the centre will require over 800 full time staff and will also create hundreds of other new jobs among suppliers and logistics companies serving distribution centres across the North of England and Scotland.”
There are other ports and port operators willing to follow in PD Ports’ footsteps. Only last summer the government gave the go ahead for Dubai Ports’ £1.5bn London Gateway scheme on the former Shell haven oil refinery in Thurrock, Essex.
DP World’s proposals include a 2,300m long container quay with a fully developed capacity of 3.5 million teu a year. In addition there will be a new 700 acre logistics and distribution park known as London Gateway Park, capable of accommodating buildings in excess of one million sq ft. London Gateway will also provide capacity for 30 per cent of its goods to travel by rail.
In Felixstowe, Gazeley is developing its Felixstowe Portside scheme, which will offer up to 530,000 sq ft of space on a D&B basis with direct access to the Port of Felixstowe.
The 27-acre intermodal site is located within the Trinity Estate, which has a private road network adjacent to the port’s boundary, thereby enabling the site to be classified as ‘Portside’. As such, the site offers potential savings in import duties, other fiscal costs and the ability to use overweight containers giving up to 40 per cent additional shipping capacity. Joint lettings agents are Knight Frank and Bidwells.
In the North West, Peel Ports has recently submitted plans for the second phase of a multi-modal logistics hub of nearly one million sq ft known as Liverpool Intermodal Freeport Terminal (LIFT) at the Port of Liverpool. The £15m expansion will see the development of more than 400,000 sq ft of warehousing, expanding the port’s logistics capacity to four million sq ft.
The second stage of the development will consist of high bay, steel portal framed distribution units ranging from 70,000 sq ft to more than 200,000 sq ft, tailored to clients needs and served by sea, rail, road and inland barge.
In Scotland Forth Ports is planning a £40m distribution hub at its Port of Grangemouth facility that will provide one million sq ft of new warehousing serving Scotland and northern England. This follows a two-year £25m modernisation and improvement programme at the port.
The new hub would see the development of warehouses from 50,000 sq ft up to potentially 500,000 sq ft, all with direct access to sea, road and rail. A second phase is also being considered that would add an additional 500,000 sq ft of warehousing.
Charles Hammond of Forth Ports says: “The central location of the port makes it a logical location for a major distribution hub which will not only help Scottish businesses to maximise trading advantages but will also attract significant new business by offering a prime route into the north of England.”
He adds that construction would be phased over a five-year period and that the development could increase to 1.5 million sq ft if plans to infill an adjoining water area are allowed.