20


Issue 1 2013


Logistics is a game- changer for the North


With the UK economy now appearing to be going into its fiſth year of recession and the Chancellor’s 2012 Autumn Statement indicating that this will continue for another five years until 2018, the logistics and supply chain sector face many challenges. However, at this mid- point in a decade-long period of economic stagnation, there are some positive signs and bright prospects for some aspects of the sector and some regions of the UK, writes Professor David Grant, director of the Logistics Institute at Hull University Business School.


The north of England is poised for growth in logistics and supply chain - due to three potential ‘game- changing’ initiatives identified in a research project undertaken this year into the Humber Region’s future economic and sustainable development. The project was led by the Logistics Institute but comprised an interdisciplinary team including Hull University Business School (Logistics, Economics), the Faculty of Arts and Social Sciences (Politics, Law School) and the Faculty of Science (Geography, Engineering, Institute of Estuarine and Coastal Studies). The aim was to identify the


future economic landscape of the Humber Region to help support the Humber Local Economic Partnership (LEP), based on the region’s current and future potential for port-centric economic development, offshore wind turbine manufacturing, and other renewable energy projects such


as bio-fuel, anaerobic


digestion, tidal power and carbon capture. A baseline study found total


gross value added (GVA) for the Humber Region, comprising the East Riding of Yorkshire, Kingston- upon-Hull, North East Lincolnshire and North Lincolnshire, was £14.0 billion in 2009 (the latest statistics available) and composed primarily of production and manufacturing (28%), public administration, education and health


(22%), and distribution,


transport, accommodation and food (21%). Total 2011 population in the region was 917,600 with


406,200 in employment. On a status quo basis the population growth rate in the Region is predicted to average only 0.5% per year through 2025 while the working age population will decline from 2020 onwards as the baby boomers retire. However, the three ‘game-


changers’ could affect this situation not only in the region but also in other parts of the north of England. A survey of over 100 logistics companies in the region predicted a 17.5% growth in port- centric logistics activities by 2025, translating to an additional £350 million GVA and 8,200 jobs. Also, increased economic activity due to offshore wind developments was predicted to be between £4-10 billion GVA and 8-15,000 jobs through to 2020. Lastly, the economic impact from the growth of other renewable energy related developments in the Yorkshire and Humber region is estimated to be £1.3 billion GVA and 4,200 jobs. Thus, the port-centric logistics


development, offshore wind energy projects and other renewable energy project initiatives have the potential to increase total economic activity and employment for the region by a range of £5.65-11.65 billion GVA and 20,400-27,040 jobs respectively and will also provide spin-off benefits for the rest of the north. However, an increase in port-


centric logistics activity also ties in to two other opportunities highlighted at recent conferences:


the development of the E20 corridor from Limerick to St Petersburg (previously noted in FBJ-Online 18 September 2012) and an increase in intermodal rail freight traffic and infrastructure. The Logistics Institute and Hull University Business School hosted the first conference on the E20 trans-European road route in September and participants discussed ways in which businesses could take advantage of the 1,880 km route and develop export business into neighbouring markets, the combined economy of which is estimated at £120 billion. DB Schenker hosted an


Intermodal Port Conference, also in September, to update progress and also look at the way forward for the rail freight sector. Speakers noted that rail freight tonne-km excluding coal have increased by 13% between 2004 and 2011 while heavy goods vehicle volumes have reduced by 14% over the same period, implying that rail freight is growing 3.6% per annum faster than road freight and that around £9.4 billion of new investment in the rail network to link ports to the west coast and east coast main rail lines is increasing capacity for intermodal rail traffic. In


tandem with port-


centric logistics development and increases in rail freight opportunities, there has been a noticeable growth in warehousing and a subsequent increase in distribution capability along the northern corridor.


The development of the multi-


site Humber port-side Enterprise Zone (EZ) – at 484 hectares and 15 sites, the largest in the UK - offers an added advantage for the north in terms of location for the potential inward investment being generated in support of the huge offshore renewable energy sector and complements other port- centric investments in the North, for example at Teesside by PD Ports and Clipper Logistics. The advantage of the Humber EZ has already been recognised by a recently announced relocation of the high-performance electrical cable assemblies and control panels manufacturer Cablescan to the EZ at Brough, the first of many that the Humber LEP hopes will continue to add to the region’s transport and logistics strength. Due to rising costs in the South


and environmental factors such as emissions and traffic congestion, production and distribution patterns may well shiſt to a more regionally patterned structure. Whether over coming years this is through a modal shiſt, forced economies of scale or simply higher energy prices, remains to be seen. However, the overall positive


increase in freight transportation and storage and distribution in the North - and its increasing importance as a gateway to Europe and beyond through the E20 corridor and other short-sea shipping lanes - should contribute significantly in coming years towards helping pull the country out of recession.


///NEWS


Firms seek north and south solution


Shiſts in global sourcing and the many new channels to market will force companies to seek out multiple locations for their stocks, DP World supply chain expert Peter Ward told a conference in Birmingham. Speaking at commercial property adviser Jones Lang LaSalle’s agents briefing on 9 November, he said that having a major distribution centre in the south could complement one in the Midlands, for example. DP World, with its massive


investment into London Gateway could be just the firm to oblige, he added. Meanwhile, Lisa Fitch,


associate director for supply chain consulting at BNP Paribas, said that the new port could enjoy support from the local region. She said: “From a Midlands occupier perspective, the opening of DP World London Gateway next year is perfectly timed for users that are grappling with the recession and are having to accommodate multiple channels to market.” Jones Lang LaSalle national


director, Cameron Mitchell, said there was a shortage of good quality distribution capacity looming because there had been little speculative building over the last two years.


Make your buildings future-proof says DT


Think for the future when planning your next construction project, urges British-based freight forwarder Davies Turner, as it completed a major re-investment programme at its main regional hubs. The company acquired the


7,000 sq m (75,000 sq ſt) Hams Hall Cross Dock in June of this year next to the Hams Hall road/ rail interchange and just a few hundred metres from Davies Turner’s own two high-bay logistics warehouses at Coleshill. Davies Turner is now adding


another 3,200 sq m (35,000 sq ſt) of floor-space at Hams Hall by constructing a heavy duty mezzanine. “The secret with such structures is to build them with the maximum spans between the supporting columns,” comments Philip Stephenson. “In our case the columns are spaced over 9 m (29.5 ſt) apart so as not to impede cargo handling on the ground floor. The Cross Dock platform also has the advantage of 40 loading doors with powered dock levellers, and it is at least 8 m (26 ſt) high at the


eaves. By installing conveyors and a double pallet liſt, we have developed a transit warehouse, which is ideal both for fast moving consolidation services, and/or Internet order fulfilment. The site is over 2.5 ha (6.2 acres) so it has a very large service yard benefiting from a 2.4 m (8 ſt) high weld-mesh perimeter fence and gatehouse security.” Davies Turner has also built


more narrow-aisle racking at Coleshill which now has 12,000 standard pallet locations plus another 9,000 sq m (100,000 sq ſt) of floor space for order picking, sorting and despatch. In the London area, Davies


Turner is steadily replacing and renewing the powered dock levellers serving the 60 loading doors at its Dartford international distribution centre. It has also installed energy


efficient lighting and the service yard has been raised by up to 30 cm to cater for new trailer loading heights. “We built this hub nearly 20 years ago and all such equipment is more than fully depreciated,” adds Stephenson.


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