Whitehall exports push could be hampered by dithering over Heathrow expansion
Mixed messages were emanating from the UK government today, as it seeks to boost UK ...
This week saw two more of the largest container cranes in the world delivered to London Gateway, the final two in a fleet of five that will be serving the port’s first ships when it opens in the final quarter of this year.
Although the deadline is fast approaching, chief executive Simon Moore remains confident that all the facility’s handling systems will be fully operational when it opens for business.
However, as is always the case when the opening of new port becomes increasingly imminent, the elephant in the room is which container shipping lines intend to operate services there.
News about a launch liner customer has been largely absent, although Mr Moore insists that one has been secured. Other London Gateway executives were equally adamant that the company will soon be in a position to reveal its first line, and although a rumour circulated at this week’s Multimodal show in Birmingham that an announcement would be made on Wednesday evening, nothing materialised.
One theory is that while the port may have secured its first customer, it has been unable to go public due to the reluctance of the line itself – with the launch of operations still half a year away, the carrier is concerned about a possible decline in service levels at its existing port in the interim period.
An additional threat to the project is that its opening is likely to coincide with the inauguration of other large port developments in the region, particularly Rotterdam’s Maasvlakte II development, but Mr Moore denied that regional overcapacity would pose a threat to London Gateway’s market position.
“Even with Gateway, the UK still has a shortage of deepwater post-Panamax capacity, and if as a country we do not have sufficient capacity we will become a spoke of someone else’s hub. That said, all the conversations that we have had with shipping companies is that the UK market is of sufficient size to warrant direct calls for most services, as long as we have world-class infrastructure,” he said.
In a wide-ranging interview with The Loadstar, Mr Moore reiterated the opportunities the London Gateway team believes it has identified for UK supply chains – both for shipper and container shipping lines.
“We are offering shipping lines world-class efficiency levels, but also giving them the best chance to fill their vessels with cargo – in today’s market around 1m teu goes directly to London and the south-east, and there is a disconnect between our markets and where the ports are located. Cargo owners in that region could save £190 per container on landside and road costs by going through London Gateway rather than other ports.
“As you move further afield that value saving begins to dilute. Importers and exporters based around Birmingham will save £60 per box.”
Despite some scepticism in the market over these figures, Mr Moore said they had been independently calculated by UK maritime and supply chain consultancy Drewry, and he emphasised that they represented the cost of moving containers inland, rather than shippers reorganising their UK distribution networks around cargo flows through London Gateway.
“No one has to change the location of their distribution centre – these savings are achieved simply by nominating London Gateway on their Bill of Lading.
“The next stage is how shippers can utilise the logistics park we are developing behind the port, and that would require re-engineering supply chains, but it is very much a second phase of development,” he said.
The company has been in negotiations with prospective tenants for the logistics park, although again Mr Moore refused to be drawn on possible names.
The Loadstar understands that at least one major forwarder has held intensive negotiations with London Gateway over developing a facility, but progress has been frustratingly “stop-start”. There is also a suspicion among some companies in the UK market that rather than publicly sign up those that have already expressed a serious interest in developing facilities on the site, port management, perhaps under guidance from Dubai, prefers to wait until it has convinced a big-name, blue-chip retailer or global 3PL to be its launch logistics park customer. But, questioned one source: “Is the market really so strong that you can afford to wait for one big name customer?”
Meanwhile London Gateway is constructing a 380,000sq ft common-user warehouse which is scheduled to be operational this time next year and in which small plots are to be leased on both a short- and long-term basis to smaller shippers and forwarders interested in developing a portcentric approach to their supply chains.
“That facility is presently over-subscribed, but it will allow customers to “taste” London Gateway and hopefully use it as a stepping stone to developing dedicated facilities,” he said.
That approach is also likely to dovetail with the exponential growth of e-commerce volumes, he argued. “Over the last five years the UK market has changed due to the demands of e-commerce, and the supply chain trend is coinciding with our development.”
Now that the last of the major container handling equipment has arrived, the company’s focus is also changing to the recruitment and training of staff, which includes the thorny issue of union representation.
Mr Moore said that despite recent claims from Unite, the UK’s largest dockworker union, that the company’s management team had refused to recognise it, there was no formal opposition to having a unionised workforce.
“We have had a very open dialogue with our workforce. Our position is that they are absolutely entitled to form a union and in no way would we oppose it.
“But that decision should be made by them, and not forced on them in advance, before the port is actually working,” he said.