Getting over the ‘B’ word in the UK
Like it or not, Brexit continues to dominate the agenda for the UK ports sector, reports Felicity Landon
The British Ports Association recently announced a new ‘Port Futures’ project which will examine emerging threats to and opportunities for British ports.
Split into four ‘key drivers’ of change, it will consider technology and automation; climate change and the environment; politics, regulation and the law; and social and economic change. Of course, there is plenty of meat to be had in each of those areas, but the hard truth is that Brexit and its implications continue stubbornly to dominate the agenda. While there is much discussion around the opportunities to be had in a post-Brexit world, it’s the uncertainty that is the biggest challenge for all involved.
While future Customs controls are an obvious cause for concern, BPA chief executive Richard Ballantyne highlights Public Health controls, which require certain plant and animal-related cargoes to be inspected as they enter the European Union. This includes food of animal origin, meat and fish products and other high-risk foods such as peanuts.
It will be up to the UK to set its Public Health policies for imports once the country is outside the EU - discussions are under way with Defra, and Mr Ballantyne says the outlook seems positive. However, the problem comes with UK exports. “Cargoes going out of the UK into France, the Netherlands, Belgium, Ireland, etc., will be crossing a frontier into the EU, and the EU’s rules on animal and plant products are extremely unlikely to change,” he says. “For example, for certain beef cargoes a set percentage has to be visibly inspected, there are rules for chemical inspections, and it is quite an onerous and bureaucratic process. We are concerned that some of our exports will be substantially hampered - for perishable items, food, etc., we are concerned there will be problems.”
Mr Ballantyne says that at the larger UK container terminals, up to 85% of physical intervention can be Port Health related; Customs clearance is normally achieved electronically through port community systems and there is far less actual inspection and associated delay.
“The EU is our main export market and it will continue to be,” says Mr Ballantyne. “There are definitely opportunities for greater trade - but we have yet to see any firm details on this. The industry is waiting to see where these emerging new trade markets will be.”
The British ports sector has welcomed the fact that it can disentangle itself from Europe’s much-criticised Port Services Regulation - but it will first have to implement it. That’s because the Regulation was agreed just days before the UK formally triggered Article 50, giving notice of its intention to quit the EU.
“We will be obliged to follow the PSR but we look forward to it being revoked in the future,” says Mr Ballantyne. The BPA and UK Major Ports Group (UKMPG) are in discussions with the Department for Transport (DfT) about ‘light-touch’ implementation that meets the requirements but doesn’t create too many lasting or rigid obligations: “It is about making it as workable for the ports industry as possible for a potentially short period.”
On the planning side, the industry wants to see some changes to ‘make things more port-friendly’. However, he says: “Regarding the Habitats Directive, Marine Conservation Zones and Special Protection Areas, there is absolutely no communication from the Government that they are going to make any changes, which is extremely disappointing.”
The government “makes friendly noises” about opportunities to create special enterprise and planning development zones around ports to enable and facilitate more growth, he says. “We have provided ministers and officials with proposals relating to fast-track planning and exemptions from some rules. Some ports are pushing forward successfully [with such zones] but in terms of actual planning, we are quite flat and dejected about the lack of interest from the government.
“We have environmental responsibility and are not looking to tear up the environmental rules – it is just about making them work for ports. By reducing planning burdens, you are creating the right conditions for growth and can encourage investors to come in.”
The other big issue for ports is connectivity. The DfT’s Port Connectivity Study – recently issued in draft form – is a “good, positive exercise which we welcome”, says Mr Ballantyne. “But the fundamental thing is that we want it to be underpinned by money. The overwhelming majority of hinterland connections are by road, and road spending over the past few years hasn’t kept pace with other areas of spending. A good transport network is vital to help the economy and to help the ports industry compete.”
UKMPG chief executive Tim Morris says: “Connectivity is the topic that really has an opportunity to move forward during 2018. From the ports’ perspective, what is really lacking is integrated thinking for UK freight - our job is to make the case for this.”
Mr Morris says that as a relative newcomer to the industry, he sees the UK ports industry as an “under-the-radar success story”.
“Here is a sector that enables 95% of the UK’s trading in goods. In some ways it is a victim of its own success – until Brexit came along, many people didn’t have any idea how they got their TVs and other items or how food materialised on their plates. My members alone invest £550m a year in ports and associated infrastructure. The industry isn’t subsidised, it doesn’t get price support, it is almost entirely without grant funding or loans. And yet it is absolutely fundamental in the UK economy and the lives we lead.”
He adds: “Looking at it in terms of assets, a lot of the added value from that £550m largely depends on how well your ports are connected. If a port is enormously well developed and well invested but you can’t actually get the boxes in and out of it in a consistent and timely way, then that investment is of more limited use.”
Connectivity is also moving forward in other areas, including the National Infrastructure Commission’s freight study, the Government Office for Science Foresight and Mobility study and new programmes for rail and road, he says.
“Certainly at the larger end, ports are happy to be operating on a highly commercial basis – but that needs to cut both ways and you need the state to do its bit.”
As for Brexit, Mr Morris says his members “take a balanced view” – but then his members don’t include Dover.
“There are difficulties and issues, undoubtedly, especially around making sure borders work efficiently and effectively and in a way that maintains flow, and also making sure that the general infrastructure is in place to the degree that it doesn’t hobble the whole sector.”
Brexit might not seem important for a port where trade is overwhelmingly non-EU anyway, he says – but if Customs systems are overloaded, there could clearly be an impact. He also highlights the opportunity to reshape the Port Services Regulation, as well as opportunities around planning and land use for free trade zones and other types of development.
As well as connectivity that boosts trade, productivity and sustainability, and meeting the challenges/capturing the opportunities of Brexit, the UKMPG’s five-point agenda for the year includes development rules – a positive planning and development framework to boost investment and jobs; environmental sustainability – a balanced environmental approach that delivers both sustainability and growth; and port of the future – grasping the potential of ‘paradigm shifts’ such as automation and digitalisation.
“One of the really interesting things that has struck me since joining UKMPG has been the adaptability of UK ports,” says Mr Morris. “If you went back five years and looked at the amount of thermal coal passing through, it would have been substantial. And now there is very little. A major source of cargo volumes has just gone. And yet you don’t get marches or protests or appeals for support for loss of business. The ports industry just gets on with the job and has proved itself to be very adaptable.”
The UKMPG calculates that at least £1.2bn of projects are planned or under way in the UK ports sector. This includes projects advancing, such as Tilbury 2, the Dover Western Docks, Aberdeen’s expansion and the latest expansion at the Port of Felixstowe, as well as a range of incremental build-out and development projects, and others with outline consent.
The latest phase of expansion at the Port of Felixstowe got under way in January. About 13 hectares of new paved container yard is being built behind Berth 9 in a project which involves reclamation of 3.2 hectares of seabed.
The new yard, providing ten container storage blocks with six-high stacking, will increase the port’s current storage capacity of 130,000 teu by another 18,000 teu.
“Berths 8 & 9 were the first berths in the UK built to accommodate the latest class of ultra-large container vessels. The creation of additional container storage will allow us to optimise container handling operations between the berth and its supporting yard,” says Clemence Cheng, Port of Felixstowe chief executive.
The port is also benefiting from ongoing investment in rail. In 2017, Felixstowe became the first port in the UK to handle more than 1m teu by rail in a single year.
This year, UK rail owner Network Rail will start work to increase capacity on the branch line to the port. As a result, the number of freight trains that can use the line per day, in each direction, will increase from 33 to 47 by the end of 2019.
The port will also benefit from capacity works at Ely, following confirmation by Transport Secretary Chris Grayling that this work will take place during the CP6 programme, which covers 2019-24.
Network Rail is also undertaking feasibility and planning work for further developments along the whole Felixstowe to North rail route, says Hutchison Ports UK spokesman Paul Davey.
Expansion in Tilbury
The Port of Tilbury is also poised for massive expansion, having acquired a 152-acre site which was part of the former Tilbury Power Station next door. The port has submitted an application for a development consent order (DCO) to build a new terminal, which is expected to be operational in 2020, subject to planning approvals.
P&O Ferries, which had a record-breaking year on its Tilbury-Zeebrugge route in 2017 with a 4.3% increase to 185,908 freight units on the service, will be a major user of the new terminal. The ferry operator has an agreement with Forth Ports to move to a purpose-built £150m river berth on the Tilbury2 site, to treble its freight capacity to 600,000 units a year. The move will cut the crossing time by one hour to seven hours, and the terminal will be linked directly to the A13 via a new road.
The Port of Tilbury has doubled the size of its business in the past decade and is forecasting doubling volumes from 16m to 32m tonnes over the next 10-15 years – and that is despite losing some container services to DP World London Gateway just along the river.
“Tilbury2 will deliver much-needed port capacity to support businesses importing and exporting to and from Europe and across the globe at a crucial time for the UK,” says Charles Hammond, chief executive of the Forth Ports Group.
Tilbury2 is central to the port’s £1bn investment programme for 2012-20, which includes the construction of a new 2.2m square foot Amazon warehouse on the port’s London Distribution Park. The largest warehouse in the UK, it was completed at the end of August 2017.
A new rail terminal for handling bulk cargoes has also recently opened. This is being used for regular movements of recycling glass to Berryman’s recycling plant in Cheshire and elsewhere in the UK, as well as for carrying aggregates by train.
SAFEGUARDED THAMES WHARF TO RE-OPEN
The reopening of an aggregates wharf on the River Thames this year will represent a major victory for the Port of London Authority, which fought long and hard to protect the facility from residential development.
The 17-year planning and legal battle, which culminated in the PLA acquiring Peruvian Wharf at Newham for £3m, demonstrated the importance and effectiveness of the Mayor of London’s ‘safeguarding’ policy, which protects 50 strategically placed wharves for cargo handling and ensures that they are not lost to housing.
The case has drawn attention to the opportunities to take freight off the roads and on to the water in the capital; the River Thames is the UK’s busiest inland waterway and the PLA is committed to growing intra-port volumes to ease pressure on London’s roads.
Construction and building materials group Brett Aggregates has taken over Peruvian Wharf and will open its new state-of-the-art concrete plant during 2018.
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