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RO RO Dover bounces back


Dover is the barometer of the UK freight industry – indeed, the UK economy as a whole – and while traffic levels are still some way off their 2008 peak, they are “on the same trajectory” as in the 2000- 08 boom, says the port’s director of finance and commercial, Tim Waggott. Currently, freight is running at around 2.1m units a year, against a record of around 2.3-2.4m he says. “Certainly, we’ve seen a total bounce-back in volumes since the recession, which has continued into 2011. In April 2011, for instance, business was up by around 5.7% on last year.”


He points out also, “we only need one year of growth at 2006 levels to take us back to near record levels again.”


What has also trended upwards has been the Dover Strait operators’ total share of the UK ro ro market. The port of Dover and the Channel Tunnel’s share of the accompanied export freight market is now around 95%; in the mid-1980s it was little more than 70%. Clearly, Dover is more important than ever to the country’s economic health. While arguments rage over whether and how one of Britain’s oldest trust ports should be privatised, Tim Waggott points out that much of management’s time and attention is taken up with day-to-day operational matters, not politics or long term plans. If the port of Dover stops, Great Britain stops. While the port and the ferry operators have fallen out over money – specifically, the status of £60m earmarked for long term development – on the ground relations between port and operators are still very good, he says. The need to keep things moving has coloured the port’s investment short-term investment strategy. The new holding area in the Eastern Docks is in fact a scheme originally scheduled to be introduced after the mooted Terminal 2 in the Western Docks had opened. With no definite timescale for the latter, the new new


Eastern Docks holding area is to be brought forward. Some preliminary work will start shortly, but the major mark including clearance and relocation of buildings will take place after the Olympics rush in 2012, with completion expected n about 2013. The £6.5m Traffic Management Improvement Project (TMI) aims to reduce the frequency and extent of traffic queues on the roads leading to the port. During busy times a new assembly area will be used to temporarily hold some of the outbound traffic until space becomes available further inside the port. This new assembly area (or buffer zone) will be able to house 220 additional lorries (about 2.7 miles of traffic) and will help ensure that the check-in areas and internal roadways are kept moving. The new zone will also be a holding area if a ferry operator experiences problems whilst allowing traffic for other ferries to flow freely into the port and check in as normal. The project requires major re-organisation of the current dock buildings.


Director of port


development, Mike Krayenbrink said that the project was part of a five-year plan to upgrade the Eastern Docks, adding: “These works are essential in advance of the second ferry terminal in the Western Docks.” Tim Waggott points out that


it will allow freight traffic for any operator


experiencing problems 8293-Seatruck 270x60mm Advert 26/05/2011 12:24pm Page 1


to be separated and held, without bringing the whole port to a halt, unlike Operation Stack – which uses the M20 as a holding area. It’s too early to tell if it will eliminate the need for Operation Stack


altogether, “but it should push back the need for it,” Waggott believes. “It’s roughly the equivalent of one hour’s worth of traffic.”


Another investment underway are more long jetties for the new generation of P&O ferries. With one large ship in service, piers nine and seven are already long enough; two and three will follow soon, giving enough flexibility to allow for maintenance or other incidents. Meanwhile, the port is working to put itself in a position to move quickly on Terminal 2 if and when the go-ahead is given – and the question of ownership is


the port’s future settled. The final


holding objections to the Port of Dover’s application for a Harbour Revision Order (HRO) for its Terminal 2 plans were dropped in early July, paving the way for Government approval of the plan. The HRO is a form of planning consent, is now clear for final approval by the Department for Transport, safe in the knowledge that all outstanding objections have been removed. Initial work will establish the scale of development which would be acceptable to, and supported by, the community and local stakeholders while maximising the potential of the site. This includes looking at the range of uses for the site and development opportunities.


It also includes a


significant commitment to provide road access to the regeneration site. Mike Krayenbrink described it as “a significant milestone in paving the way for a positive decision by Government.” “We should be able to hit the ground running when the time is


right,” added Tim Waggott. He stressed: “We’re still working very much on the basis that Terminal 2 will be required.” Regular annaul traffic levels of 2.7m freight units – only 0.4m more than the all time record and just 0.6m more than current levels – would be the trigger-point for building to start. While no one at the port is willing to give an exact opening date, Dover’s management suggest it could be around the end of the decade. But for T2 to happen, Dover must have access to the capital and debt markets, and that means ditching trust port status and going for full privatisation, Waggott argues. The port’s chief executive Bob Goldfield


points out that it has had “almost no access” to bank finance, but this will become increasingly necessary if it is to push through “step change” developments like Terminal 2, which will come close to doubling Dover’s total capacity.


At the time of writing, the Government was consulting on the criteria for the sale of trust ports – it is keen on more community involvement in line with its ‘Big Society’ vision – but Waggott is confident that Dover’s plans for a community port trust would fulfil those. Assuming that is the case, Dover’s privatisation could be back on track by the end of the year. While there are plans for a People’s


ISSUE 4 2011


Port with a much greater degree of community involvement, the only plan currently before the Secretary of State is the Port of Dover’s plan, Waggott points out.


The other piece of unfinished business is the dispute with the ferry operators over the ‘missing £60m’.


Three of Dover’s largest customers wrote to the port’s chief executive, protesting at the alleged misuse of £60 million they provided to fund Terminal 2 and a proposed 35% increase in their tariffs over the next three years. Subject to the inspector’s report, there will probably be a public enquiry by the end of the year.


Life goes on for K Line after the quake


Despite its Japanese ownership, K Line’s deepsea ro ro business suffered much less than might be expected from March’s Great Earthquake, says director of K Line Europe’s car group, Peter Menzel. In fact, prospects for the next few months are looking much better than they have for quite some time, he says. The main effect of the quake was, as might be expected, on K Line’s car traffic to and from Japan. All manufacturers suffered some disruption, “although they have made great efforts to get back to normal,” Menzel points out. Some ships have had to be idled, but by early June the last of them were being reactivated.


“Things are getting back to normal. Yes, there has been some disruption to services out of Japan into Europe and the US, which in turn has meant less tonnage available out of those markets, but we have been able to fulfil the majority of our export commitments.”


While K Line is a Japanese company, it has long diversified out of that market and is an important carrier on many other trades including the transatlantic and in important emerging markets such as China, India and South Africa. Total volumes have been depressed “but we are now expecting a strong rise,” Menzel continues. “In fact, globally, we expect capacity to be short in the second half of this year.


Car traffic is already up and there has been a rapid rise in demand in many markets, a quite impressive recovery.”


Some markets stand out as particularly strong. China is one, and in fact there has been something of a “paradigm shift” there says Menzel “to the point where volumes are as big if not bigger than they are in Japan.”


The US is another. Several of the German-owned car makers have strengthened their manufacturing presence there – BMW and Daimler for example – in what is still a major market. Partly, this is in response to the disruption to global supply chains following the Japan quake, but the recent volatility in exchange rates has also played a part. Having production capability in all the main currency zones of the world is a good hedge against fluctuations. While much of the German manufacturers’ production is for domestic US consumption, some of it is being exported to other markets, including Europe.


Russia is another big market and one that has re-emerged after being in a sharp depression little more than a year ago. “If you follow the trend in the crude oil price, you have a good guide as to the strength of the Russian economy and hence the car market,” Menzel explains. It’s a market that tends to swing quite abruptly from boom to bust and


back again.


Of the other so-called BRIC countries, Brazil has always been strong though its car exports have weakened lately while India could have great potential, if it can get through its current difficulties. “Inland logistics in India are difficult and the ports are not that great. Also, India has until now had other target markets for its vehicle exports such as China. But it will develop.” India could well see the next major K Line service development, but it does depend on suitable ports becoming available.


The underlying strength of the market and expected


capacity


shortage notwithstanding, K Line – and probably other ro ro operators too – will not be rushing off to the shipyards waving the company chequebook. Very few new ro ro ships are scheduled for


delivery in 2012 and into


2013, says Menzel. “During the economic crisis, a lot of the old tonnage that had been kept in service during the boom years was, finally, scrapped. Some 115 old car carrying ships went under the torch in 2009. But now the cost of newbuildings is very high, and profitability for the lines is very low, mainly because bunker costs are so high. So despite the capacity shortage, it’s very hard to make a business case for new ships.”


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