ISSUE 4 2010


NEWS


London Gateway could be a game-changer, says Cable


The new London Gateway port and logistics development will “fundamentally change the economic geography of Britain,” predicted Business Secretary Dr Vince Cable when he visited the site on 5 October. The £1.5bn DP World development had the potential to completely realign the UK’s existing logistics patterns, he said. Work on the site is forging


ahead, and over a quarter of the dredging and new port land has been competed. Chief executive of London Gateway Simon Moore said the infrastructure for Phase 1 would be completed in 2012, after which the port would be in a position to receive its first handling equipment. The port would open “in line


with market demand” said Mr Moore, though he added that he hoped it would not be too long after completion of the engineering works.


DP World’s communications manager Xavier Woodward said that, at present, a lot of imported cargoes destined for the London area had to be moved from Felixstowe and Southampton to warehousing well away from its eventual destination, often in the Midlands. The new development would


create a major logistics facility in the south-east of England, he said, pointing out that while the capital accounted for 64% of the UK’s containerised cargo demand, it only had 10% of the warehousing capacity. Simon Moore also pointed out


that London and the South-East is, surprisingly, one of the UK’s biggest generators of exports – mostly in the form of scrap paper and metal being sent for reprocessing in Asia. “It’s a around 20% of the total, or 2m teu a year,” he said. He added that London


9 Rents to recover


London is the world’s second most expensive market for logistics property, according to commercial property firm CB Richard Ellis Group. In its first global analysis of the industrial logistics sector, Tokyo was the most expensive location in the world for distribution or logistics centres in the second quarter of 2010, with rentals the equivalent of US$22.09 per sq ft (psf), but was followed by London at $19.51 psf. The English capital was trailed by some distance by third-placed Sao Paulo in Brazil, at $13.01psf. The other top ten locations were Singapore, Amsterdam Schiphol, Paris, Sydney, Madrid, Perth and Brisbane. CBRE added that world industrial property markets “are now in recovery mode, albeit at very different stages, with Asia leading the rental recovery.” Richard Holberton, director of EMEA Research, CBRE, said: “Once


the path to recovery becomes more robust, demand for prime industrial and logistics properties will increase throughout Europe. Raymond Torto, CBRE’s global chief economist added that falling demand for industrial and logistics properties in 2008 and 2009 led to a decline of over 10% decline in CBRE’s global rent Index, bringing rents back to 2003-2005 levels. However: “Given the strengthening demand and production


Vince Cable (centre) said London Gateway would fundamentally alter the economic geography of Britain


Gateway would have


significantly faster container handling rates than most other comparable ports and, as well as seven container berths capable of handling the world’s largest box ships of 12,000teu or more, it would also include some of the UK’s largest logistics hubs, with a


People of Dover bid to buy port


The Dover People’s Port Trust has officially launched its community scheme to buy the UK’s leading ferry port. Backed by singer Dame Vera Lynn, of ‘There’ll be Bluebirds over the White Cliffs of Dover’ fame, as well as the town’s new Conservative MP Charlie Elphicke, it follows the Dover Harbour Board call for government approval for privatisation in January and public consultation on the scheme which ended in August. Dover is part of an expected tranche of trust port privatisations by the new government. But in response, the Dover Harbour Board said that the Dover People’s Port Trust (DPPT) proposals were “totally unrealistic and undeliverable” and that Trust members were “making various promises to the community of stakeholders that they cannot possibly deliver”. It said that the People’s Port Proposal was “full of inaccuracies, falsehoods and unsubstantiated statements” and “cannot be considered a serious bid”. DHB said that the DPPT “appears, without any due diligence or business plan, to offer the government £200 million for the port” - which could only be achieved if every man woman and child in Dover contributed over £5,000 per


head to the Trust. “The reality is that financial institutions would be financing the deal, if indeed any deal could be constructed in the way proposed.” The DPPT proposals also appeared to ignore the need for £85 million of investment in the existing Eastern Docks over the next five years and the £250 million needed to build Phase One of terminal 2 in the Western Docks. “This would, without doubt,


result in an unaffordable level of debt in the business, without a substantial rise in tariffs to ferry operators. Claims that the DHB has under-invested in the port are “totally unsubstantiated and misleading,” said DHB, which pointed out it has spent over £125 million in the last ten years on direct port investment Also, DHB pointed out, while Mr Elphicke has stated that he wishes the port to be financed without using ‘foreign money’, the DPPT states that the potential funders are all “major international financial institutions”. It also questions whether


DPPT’s request “to override the requirements of the 1991 Ports Act and treat them as a sole bidder” would be legal,.“even if the government were prepared to ignore good governance and best practice and override a


competitive bid process.” DHB chief executive Bob


Goldfield said he expected a ‘minded to approve’ decision from the Department for Transport by the end of the year that would then start the sale process for the trust-operated port. DHB has been locked in a


bitter dispute with its main customers, the ferry companies. The latter claim that a £60m fund for enlargement of the port and building of a second terminal has been diverted into the DHB’s general coffers, including shoring up its pension fund.


total of 9m sq ft of space. It will also boast the UK’s longest tidal window and Simon Moore said that wind conditions would be more favourable than in other ports. London Gateway would only have had to have closed twice in a 12-month period, he claimed.


levels in the world’s emerging markets we anticipate that global industrial rents for prime logistics properties will stabilise and gradually begin to increase before year-end.”


AP Moller to go short-sea


A spokesman for AP Moller-Maersk Group’s, owner of Maersk Line and Safmarine, confirmed to FBJ that the company is planning to set up a separate intra-European company. The aim is to start operations by the middle of next year. Maersk Line already operates a limited number of services within Europe, Scandinavia and the Mediterranean and already has a short-sea subsidiary in Asia.


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