Build it and they will come?
DP World says London Gateway’s proximity to population can reduce costs.
London Gateway, DP World’s new terminal, is scheduled to start regular operations Nov. 7 when the Southern Africa Europe Container Shipping Service (SAECS) shifts its U.K. port call from Tilbury, which is just a few miles upriver on the Thames. (The terminal did have an early visitor in September when the fire-damaged Zim Rotterdam offloaded several thousand containers.)
The weekly call by the SAECS consortium — which includes Maersk Line, Safmarine, MOL, and Deutsche Afrika Linien — is expected to exchange about 800-900 containers on a weekly basis.
It’s a modest start for a terminal that will eventually have the capacity to handle 3.5 million TEUs annually.
Peter Ward, cargo supply chain commercial manager for London Gateway, said in an interview last month that by the fourth quarter of next year, two of the terminal’s planned six berths will be in operation.
Big Ship Needs. Ward explained his confidence about the terminal’s future by noting an expected increase in demand for berths by ultra large containerships (ULCS) with capacities of more than 10,000 TEUs.
According to the information service Alphaliner, there were 192 ULCS ships with capacities of 10,000 TEUs or more operating on Oct. 1, 63 of which had capacities of 13,300 TEUs or more. Another 127 ULCS are on order, 88 of which will have capacities of 13,300 TEUs or more.
Those big ships need berths with special infrastructure, noted Ward: berths 400 meters long and cranes able to reach over 22-24 rows of containers stacked 10 high on a ship’s deck. At London Gateway, they like to mention the gantry cranes are taller than the famous “London Eye,” the giant Ferris wheel in downtown London.
Other British ports have few such berths, Ward said.
“At Southhampton, at the moment, they have one berth that can handle an 18,000-TEU class vessel and at Felixstowe they have three berths that can handle that type of vessel simultaneously,” he said.
Translate the ULCS orderbook into port calls, and Ward expects somewhere in the order of 20-25 weekly port calls in the United Kingdom by these big ships. The four berths at Southhampton and Felixstowe are not sufficient to handle that number of port calls, he said.
As ships get larger, and perhaps look to call fewer ports, the risk to the United Kingdom is that the country might not retain hub port calls. But Ward said “the U.K. always has sufficient cargo pull to have a direct call of its own as long as it has the infrastructure to support the bigger ships,” and London Gateway will provide the berths that the big ships need.
“I think the U.K. market is of significant interest — all the major carriers call at the U.K. today and the hope is that they will continue to call at the U.K.,” he said.
Primary Location. But there is another compelling idea behind London Gateway, said Tom Conroy, spokesman for the terminal.
Because the port is just 25 miles from central London, it’s closer to much of the population of Great Britain which is concentrated in London and the surrounding area. Residents of London and adjacent counties also have higher disposable income than other parts of the country.
Most distribution centers in the United Kingdom are concentrated north of London, in the Midlands, near Birmingham. That means many goods arriving in ports like Felixstowe are trucked north to distribution centers, then moved back to London or other locations in the south of England.
DP World believes some of that distribution activity can be located closer to London, and it’s building a massive distribution center adjacent to the new container terminal with up to 9.25 million square feet of space.
In June, the big U.K. retailer Marks and Spencer announced it will build a 900,000-square-foot distribution center at the DP World Gateway Logistics Park.
“London Gateway will become our third large distribution center in the U.K.,” said Marc Bolland, chief executive of Marks & Spencer. “As we become an international, multichannel retailer, London Gateway will help us become more efficient by cutting costs and locating our supply chain closer to our stores and our international markets. It will also help us deliver against our Plan A objectives by removing road miles and emissions from our network.” (Plan A is Marks & Spencer’s sustainability program.)
Ward said London Gateway is in discussion with other firms that are interested in locating at the logistics park which should be a third of the way developed by early 2015. Included are discussions with parties interested in building common-user facilities, such as one for temperature-controlled goods which is important for carriers in the North-South trades where agricultural commodities are a major cargo.
Ward said the multi-user facilities should be attractive to companies looking to do distribution center bypasses and move their goods directly to London.
“You don’t have to be a 50,000 TEU-a-year shipper to be able to do port-centric logistics activities at London Gateway,” he said. “We will have a common user facility so that the whole market has access to that on a kind of plug-and-play transactional basis.”
The port authority said 78 percent of the population of Great Britain is closer to the London Gateway than Felixstowe, its principal competitor, and another 20 percent of the country is about equidistant from the two ports.
To carriers that want to keep their main distribution in the Midlands, Ward said there would be opportunities for distribution center bypass and direct shipment into London and environs.
With the London Gateway only 10 miles from M25, the highway that encircles London, the terminal will create increased opportunities for trucks coming from the Midlands to find backhaul cargo and do more triangulation.
The terminal has been improving interchanges along A13, the highway that connect the terminal to M25, which then connects to the national road network.
However, London Gateway expects a third of the cargo moving in and out of the terminal to move by rail. Although Great Britain does not have double-stack trains, clearances can accommodate both regular and high-cube containers.
There is also potential for short-sea shipping services to move cargo to and from Northern England, Scotland, and Ireland.
Formidable Competition. London Gateway is likely, however, to face vigorous competition from Felixstowe, which is owned by Hutchison Ports U.K. Ltd. and handled more than 3.7 million TEUs in 2012, 40 percent of the container traffic in the United Kingdom.
Felixstowe has ambitious expansion plans of its own, saying it’s “on target” to deliver a container-handling capacity of 6 million TEUs by 2020 and an additional 2 million TEUs within Harwich Haven by 2030.
Also, Peel Ports is adding berths in Liverpool capable of handling two 13,500-TEU ships. It said this will provide a “lower-cost, greener alternative to traditional southern English ports.”
London Gateway is a massive project covering about 1,000 acres and built on the site of the former Shell Haven oil refinery. About 450 acres are devoted to the marine terminal and another 560 acres to the adjacent logistics park.
The terminal is highly automated, equipped with ship-to-shore cranes capable of lifting up to four 20-foot containers at a time.
Containers are transferred from the quayside to container stacks using “sprinter shuttle carriers.” Initially these cranes are manned, but sometime next year it’s expected they will become fully-automated, their movements directed by a wire guidance system.
Each berth will have 10 container stacks, tended by a total of 20 stacking cranes.
The terminal is designed to avoid having longshoremen or truck drivers in areas on the terminal injured by containers or related handling equipment. Even the work to remove or place twist locks on containers is performed by longshoremen in special cages mounted on the legs of the crane, off the dock so they can avoid injury,
Containers are moved between the container stacks and on-dock rail using special “cassettes” that the company said can save on time, cost, and personnel.
The terminal is designed so the expectation is that truck drivers will be able to drop a container and pick up another in less than an hour, Ward said.