While Felixstowe, Southampton and Tilbury handle most of the UK’s containers from Asia, another port is counting on the completion of a major expansion project to increase its role in the trade lane.
Peel Ports, which owns and manages the Port of Liverpool, has been building a deep-water container terminal called Liverpool2 that will double the port’s container-handling capacity. Scheduled to open in phases in 2016 with the first berth being completed at the turn of this year, the new terminal will also be capable of handling two 13,500 TEU vessels simultaneously, whereas the current maximum ship size is 4,500 TEUs.
“Right now, because of the constraint on ships, Liverpool has not been able to attract direct ships from Asia,” says Jeremy Masters, regional director of Asia Pacific at Peel Ports Group. “So its share of the Far East-Europe trade has been very small.”
According to data from the UK government’s Department for Transport, the containerized shipping market between the Far East and the UK currently amounts to approximately 1.8 million TEUs per year. Peel estimates that more than half is destined to locations that are closer to Liverpool than the southern UK container ports. More specifically, 365,000 TEUs of import containers are estimated to be destined for locations within 120 kilometres of Liverpool.
“We think that there’s a very powerful argument for carriers to deploy their ships to Liverpool and that they would not have to have a big market share to actually fill those ships,” Masters said in an interview with Asia Cargo News in Hong Kong. “We’re realistic in terms of our ambition. We don’t believe that suddenly everyone is going to take their ships away from the South and the North – what we’re really more realistically targeting is to say that if you’re running two or three strings of ships a week into the southern UK, you should also consider running a string of ships into Liverpool.”
One significant factor is cost. Peel says that importers will, on average, save transportation costs because of the removal of about 320 kilometres of land transport per container.
“If you look at the cost of delivering a box to a place which is 50-60 miles [about 80-96 kilometres] from Liverpool, versus bringing it all the way from Felixstowe or Southampton, the cost difference can often be well in excess of £200 [US$300],” says Masters. “For the customer, that’s a tremendous amount of money and in fact, if you look at the freight rates today between the Far East and Europe, you have a difference on the inland that’s almost the same as the cost of moving the box all the way to Europe. So it’s a very significant issue and from the customer’s perspective, they’re very happy to see us pushing Liverpool.”
Masters says a unique advantage is the direct connection to another important conurbation in the country.
“We have the ability to link Manchester with an all-water solution via the Manchester Ship Canal, so we can take boxes off the ship in Liverpool and put them on a barge up the canal,” he says. “That’s very appealing to some clients, particularly those who are starting to build facilities along the canal.”
In May 2015, Peel Ports launched Cargo200, an initiative to encourage shippers in the northwest region to support Peel in its push to bring carriers to the Port of Liverpool. It has already secured 50 advocates, including retailer B&M, automotive manufacturer Jaguar Land Rover and equipment manufacturer JCB.
“They’re going to see very tangible benefits,” says Masters. “Apart from cost, we’re also talking about the distance it would take off the road over the next five years, which is about 200 million miles [320 million kilometres]. So we want to take off road haulage to reduce congestion and the environmental impact.”
As regional director, Masters’ job is to present his case to carriers, forwarders and NVOCCs in the Asia-Pacific region, and he says that he tries to rely on objective data to get people to make their decision based on the market size and the costs. “Theoretically, if there was perfect knowledge, I wouldn’t need to be here,” he says. “People would actually make the decision to go to Liverpool based on that knowledge, because it is a compelling case.”
With regard to the economic slowdown in China, Masters isn’t too worried. “When you look at the 1.8 million TEUs and you think that is only going to grow 2-3% rather than 6-7%, there’s still a giant pie,” he says. “It would be wrong to say that it’s our right to have that cargo, but we think a good portion of that pie should naturally come via Liverpool. So even though the cake is not building quite as quickly as it has historically, it’s still a very big cake, and it’s a cake that will continue growing. We also think the UK will grow quicker than some other places in Europe.”
Masters predicts that growth rates for the Asia-Europe trade are not going to be particularly exciting for the next year or two, but says he believes that the trade will stay robust. “We would hope that there is a little bit of a recovery after a sluggish period,” he says. “I personally would not believe it would go back up to the sort of double-digit growth that we saw before, because that was based on a high degree of outsourcing. You can’t do that twice.”
The Europe-Far East direction in particular should see an improvement, according to Masters. “Obviously you’re seeing a growing middle class in China and throughout Asia, and there will be more demand for various goods from Europe,” he says. “Right now, the UK is quite heavily imbalanced – there’s a lot more going into the UK from the Far East than coming out. I would expect demand to increase out of the UK as well, because there are goods that will become more attractive as time goes on.”
Overall, Masters says Peel Ports would love to participate in the Far East-Europe trade. “We would certainly like to have some additional deep-water strings coming into Liverpool and serving the new terminal,” he says. “From my point of view, if we could get one from the Far East in the next year, I’d be very happy.”
By Jeffrey Lee
Asia Cargo News | Hong Kong