38


Issue 3 2012


The North East: heading in the right direction again


Things are beginning to move again in North-East England. A mothballed steel plant in Middlesbrough is reopening and Nissan has just announced big plans for its Sunderland car plant, while industries like pharmaceuticals are booming. All this could mean more business for the regions ports, airport and freight operators.


A whole new slab of business for Teesport


Business may have marked time in 2011, but there are several developments that will boost traffic through the port of Tees and Hartlepool


in 2012 and beyond,


says David Robinson. Moreover, as the chief executive officer of Tees & Hartlepool owners PD Ports, points out, these are ‘real’ projects, not speculative pipe-dreams, that almost certainly will result in increased tonnage on the Tees. Thai-based conglomerate SSI’s


purchase of the steel slab mill should easily add 6-7m tonnes of extra traffic, mostly imported iron ore, along with perhaps 2-3mt of steel slab exports back to Thailand, plus smaller amounts of by-products from the smelting process. The new business would comfortably push Teesport’s total tonnage back above the 42mt mark, possibly 45mt. SSI’s decision to buy the mill was


one of the best bits of news Teeside has had on the employment front for many years. The Thai company has re-employed 1,000 people and PD Ports a further 60, with the expectation of more to come if the export trade takes off as expected. Some export berths may be deepened for the traffic in the 25-tonne slabs. Steel plants are in short supply in


Asia, so SSI jumped at the opportunity to buy a complete working slab factory for $1.5bn, including the purchase price and the investment in redeveloping the operation.


Also, after several years, there are


strong hopes that biomass business will finally start to realise its potential. MGT is looking to build a biomass power station on Teesside while another rival company is hoping to build an import terminal that will, in terms of tonnage through the port, be even bigger (3m tonnes of fuel as against MGT’s 2mt). Hartlepool and Teesport are also


talking to offshore wind companies looking for large amounts of space attached to a deepwater port to develop the next generation of turbines. David Robinson says: “We’re all waiting for the Government to ratify the Renewable Obligation Certificates policy, which should be this year, and then there will be the debate about where the new ‘Round 3’ windfarms will be built.” Several ports have put themselves forward, but he reckons that Hartlepool offers one of the most cost-effective and most quickly realisable solutions compared with the alternatives. “I think the established ports with a large landbase will more than likely win,” is his analysis. There was slight disappointment


when the Spanish Gamesa wind turbine manufacturer decided to set up in Leith in Scotland, but long term there is plenty more business to be won, says Robinson. Steel and power may provide


the major chunk of the ports’ business in terms of tonnage, but containers and logistical activity are


also important profit generators. A £17m investment programme into the container terminal has been completed over the past 15 months and the company is now refocussing its PD Logistics Business to offer ‘port centric’ activity on a north-south axis. Robinson explains: “In the past, we have focussed on Teesport but we haven’t particularly joined up our importers and exporters and our customer base in the north is very different from that in the south.” (PD Ports is already a major operator of warehousing in Felixstowe with around 500,000sq ft.) PD Ports has also set up a Felixstowe version of its ‘Logical Link ‘ shortsea solutions service. The concept is the same as in Teesport – offering a range of forwarding and logistical services to attract importers and exporters and so drive traffic volumes through PD Ports’ facilities. “What we would like to do is


leverage the relations we have with the likes of Asda and Tesco in both Teesport and Felixstowe. As part of that, we are looking to further expand our presence in Felixstowe – either more space or by developing our


coastal shipping activities.”


PD Ports’ existing customers in Felixstowe – all of them importers – include paper products, drinks, foodstuffs and chemicals. “We’re not looking for a million square feet, but we would like to build a bigger platform in Felixstowe.” Meanwhile, container traffic in


Teesport has been growing steadily – 267,000teu on PD Ports’ own container terminal and 420,000teu for the port as a whole; many of the ro ro operators move substantial numbers of boxes on their vessels. “That makes us the second-largest container terminal in the North of England, and we have the capacity to comfortably reach 620,000teu a year.” The only thing that is holding back


“Our port centric model


continues to grow, and with manufacturing in the North-East strong and companies being encouraged to export, the position is as good as it’s ever been”


development is the generally slow market, although David Robinson reckons that northern ports are currently outpacing their southern counterparts in terms of what growth is currently available in the market “by quite some distance” - albeit from a lower base. Teesport has been increasing its market share, says David Robinson, and he believes that the port’s relationship with the likes of Tesco and Asda will bolster that trend. In similar vein, the Clipper Logistics shed is being built at Winyard, about seven miles away and, when it opens in August


or September, will form the national logistics centre for the George clothing chain, as well as offering space for third parties in its total of 750,000sq ft. “That will bring the total square


footage of port centric space in Teesport to close on 4m,” enthuses Robinson. “And there’s also the potential to add at least another 2m sq ft. So as a port, I think we’re now recognised as a serious player.” Teesport has plans to expand


even further and to create new deepwater berths but, as David Robinson says, “we’re not going to build a huge container terminal as a leap of faith. But if we do fill all our capacity, we will need to build new berths and they would certainly be deepwater.” He is confident that that day will


come, barring any return to a serious recession. “We are slowly starting to see regeneration of industry and that is coupled with recognition that Teesside has one of the best logistics platforms in the country. Our port centric model continues to grow, and with manufacturing in the North- East strong and companies being encouraged to export, the position is as good as it’s ever been.” Short-sea feeders are continuing to


develop, with Feederlink, Unifeeder and BG Freight all running regular services and amounting to 10-12 calls a week to various European ports. It’s not quite a daily service to each of the main European hub ports but the trend is in that direction, says Robinson. He is also trying to encourage


more traffic onto the rail links that operate from the port to various points in the UK. “We’re gradually building a series of services. The link to the North-West, for instance, is doing OK but it could be better supported and we’re trying to


get


consider Tesco is


the the Baltic operators to using rail


to Scotland.” also considering using


rail for its outbound movements from Teesport to Daventry in the Midlands. Rail traffic could be boosted when work to gauge clear the route to the East Coast main line is completed this year; PD Ports and Network Rail are jointly funding a £0.75m scheme to rebuild a bridge. It’s not simply hardware that has


put Teesport in a strong position, he argues. “It’s not just a question of assets, of saying: ‘Please come and use my shiny new container terminal’. It’s also our freight management, haulage and rail abilities.” As a major port owner, PD Ports


is always on the lookout for other opportunities in the sector. While sales of UK trust ports haven’t taken off – the privatisation of Dover seems to be seriously bogged-down and this seems to have stymied the market for the time being – there could be opportunities in Ireland, where the government has backed away from full privatisation but is still seeking relationships with potential investors to develop the sector. “We have even looked at Gothenburg, and while our presentation was highly praised, we lost out to the really big players.” Back in the UK, if and when trust


port privatisation does get rolling again, PD Ports would be interested, insists David Robinson. “I’ve always been of the opinion that a strong integrated group of ports in the North- East would have a better chance of attracting inward investment. The port of Tyne say they’re not for sale, but an integrated group might have the capital to develop things like multi-storey car storage areas. We have got spare capacity and there is a degree of synergy between the two.”


///NORTHEAST


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