A central role

Some call it ‘portcentric’, others the ‘one-stop-shop’, and still more simply refer to it as ‘stripping and breaking’. But fancy name or not, the shift towards port-based logistics solutions – based around unpacking, storing, adding value and distributing from the port – continue to gather momentum.

In some ways, portcentric actually means putting things back to how they used to be – after all, isn’t that why warehouses built up around ports in the first place and why refineries are still placed next to the port, to take immediate advantage of imported feedstock?

At the recent Port Centric Logistics 2011 conference in Birmingham, England, speakers gave some thought to the reasons why port-based storage and distribution fell out of fashion in the UK – and why the industry could be poised for a rapid shift back to port.

The UK’s so-called ‘golden triangle’, the Midlands area stuffed with distribution centres, was a logical development 25 to 30 years ago, for a retail sector mainly sourcing products within the UK. How times have changed.

“You can see that the original strategy of a national distribution centre based in the middle of the country made sense, especially when most of the goods were made or processed in the UK or came in by land from the rest of Europe,” says Frans Calje, PD Ports’ managing director unitised. “But as soon as such a significant percentage of the goods were produced in China and elsewhere and arriving by sea, the whole dynamic changed.”

It makes no sense to ship thousands of containers from the southeast UK ports to the ‘golden triangle’ for unloading, he says; the containers are returned to the port mostly empty while the goods are then loaded into other road vehicles for distribution, often ending up almost back to where they were imported in the first place.

The interesting factor now is that many of the original 25- or 30-year leases for distribution centre property in Lutterworth, Daventry, Milton Keynes et al are coming up for renewal in the next two or three years. What will the retailers do next?

“Twenty-five or so years ago there was mass building of replicated warehouses and distribution centres in that region; this first round of leases are coming up for renewal with the primary landlords and the question is whether or not people renew, given the supply chain changes,” says Murray Gibson, head of sales and marketing for Hutchison Ports UK.

He gives as an example a major UK retailer which had the proud boast 10-15 years ago that 95% of everything sold in its shops was manufactured in the UK – therefore it made sense to sign up to the golden triangle-based supply chain, as the best equidistant solution for drawing in products from British manufacturers.

“Now, it is quite the reverse. A supply chain in which almost everything is coming in from overseas turns the whole thing on its head; in the present situation, you wouldn’t have been there anyway. Over the next couple of years, people have the chance to pick up a clean sheet of paper, and many supply chains are likely to be radically altered.

Stephen Taylor, a director of PortCentric Logistics Partners, agrees: “Many of the golden triangle properties are not state-of-the-art and don’t necessarily have all the energy-saving design features that a new structure would have. So companies are considering how they are renewing their portfolio of warehousing, looking at their supply chains and long-term planning of where to locate these facilities. We believe there will be a little bit of a ‘strategy window’ for companies to take a fresh look at portcentric logistics.”

Of course, the UK isn’t unique in taking the concept forward – Mr Taylor has recently been working with a major US port that is looking to develop a new container terminal linked to portcentric developments. Elsewhere in the US he says the Port of Savannah is an excellent model where a number of major retailers have established import centres for deepsea container cargo, with the port attracting additional shipping services as a result.

“And it is happening in mainland Europe too; added value logistics is something that everybody is looking at. It is truly global and I do believe it is a long-term trend. More investment is definitely expected in facilities for portcentric logistics.”

For ports, it is no longer just about cargo throughput but about capturing added value through the port, he says. “Portcentric helps jobs and reduces carbon footprints. And saving fuel is increasingly important with the rising oil prices.”

Marks & Spencer’s head of logistics strategy, Emile Naus, told delegates at the conference that the focus is not just on cost – it is about reliability and keeping to schedules, vital ingredients when more and more goods are being sourced through a global supply chain.

“The reduction in road miles and subsequent ‘green’ benefits may have been instrumental in helping companies initially opt for a port-based warehouse close to their customers. But, in the end, it’s the economic advantages which will win the argument,” says PD Ports’ Mr Calje.

And there are knock-on benefits for ports too, of course. PD says the portcentric strategy has been instrumental in increasing the number of shipping services calling at Teesport – not only PD’s own Logical Link feeder service from Felixstowe but also new calls by both deepsea and shortsea operators. “This gives both importers and exporters more options to choose sea freight services close to their business centres.”

Both Teesport and the Port of Tyne further north in the UK say that recent growth in container volumes have been based on portcentric successes. Teesport numbers Tesco, Asda, Taylors of Harrogate, Asda George and Saudi Basic Industries Corp (Sabic) among its portcentric customers; Port of Tyne has the TV/internew/screen shopping group JML, Nissan and Tetley.

HPUK, which owns Felixstowe, Thamesport and Harwich International ports, has portcentric solutions in place for canned and packaged food goods, general merchandise, building materials, heavy equipment and high-value electronic and electrical items. Bristol Port recently announced that it had won the contract to become the national distribution centre (NDC) for Matthew Clark Wines – a contract which involves distributing bottled wine from the port to the client’s ten regional distribution centres throughout England and Scotland. Bristol has installed new racking throughout a 10,000 sq m warehouse, purchased three new reachtrucks and taken on 15 new employees to handle the work.