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Issue 6 2015 - Freight Business Journal


///UK NORTH EAST


Bulk turns into boxes


Freight in the North-East of England used to be all about big bulk shipments – especially coal. But the region is increasingly turning to containers and ro ro, reflecting the changes in local business.


Ripe for rebalancing


Ports in the North-East of England were mostly about big bulk shipments, but that is beginning to change, says Professor Amar Ramudhin, director of the Logistics Institute at Hull University (pictured, right). While it is unlikely that anything will ever substitute for the once massive trade in iron ore or coal in sheer tonnage terms, containers and ro ro are among the fastest growing traffics, he says. And while the North-East and Humberside ports have not traditionally been major box handlers, that has to change, he argues. “The container trades in


the UK are dominated by the southern ports and everything has to move north-south at the moment,” he told FBJ. “But that is not viable, either in terms of emissions, or road congestion.” It is though a chicken and egg


situation. While major shippers may have a preference to have ports in both the north and south of the country, and not have to put all their eggs in one basket – especially when that basket is in the crowded south of England – there aren’t currently that many scheduled container shipping services in and out of the region, and virtually no direct deep-sea ones. And the


North-East ports would have to offer more than a token service, adds Professor Ramudhin. “A shipper whose product has an expiry date isn’t going to wait for a service that runs only once a week if they can send it south to pick up a daily sailing.” Nevertheless, he feels that the UK “is ripe for a rebalancing of its container trade, provided the northern ports can offer a high enough level of service, quick turnarounds and efficiency that shippers and shipping lines have come to expect from their major hub ports. But while everyone can see


what the objective is, how easy will it be to reach that goal, given the very heſty investments that would be required? “Collaboration between shipping lines, logistics service providers and shippers is important. And also, if a port can come to a shipping line saying: ‘I can handle your boxes for less’, I think that would be important too.” Ports on the US East Coast


faced exactly the same dilemma as those in the North of England, Professor Ramudhin argues. “Ten years ago, they didn’t handle anything like as many containers as the West coast ports, but that changed


completely.” Shippers’ reasons for switching in this case was partly to build resilience into their supply chains, a decision that stood them in good stead during the recent West Coast ports shutdown, and recent events in Calais have shown just how vulnerable the south of England is to disruption. Big US firms like Walmart have taken a conscious decision to use ports on both coasts, even sometimes if it means paying slightly more in the short term, to achieve a more balanced flow. There could also be room for


more than one major container port between the Humber and the Scottish border, Professor Ramudhin believes, provided the port owners do their market research carefully and build up a good understanding of who they are trying to serve. Being able to offer ‘port centric’ services specialising in a particular type of goods or activity could be a strong selling point and help ports penetrate beyond their supposed ‘natural’ geographic hinterlands. For example, if a port becomes renowned as a centre of excellence for handling tea and coffee, shippers of those commodities might be inclined to use a North-East port even where it entails a longer road


journey to point of consumption. Professor Ramudhin points out that Panama has successfully attracted business of various kinds


by creating special


economic zones – for example, IT or manufacturing – and while the EU and UK Government might make it hard for a UK region to offer tax advantages, there are other ways of making an area welcoming to specific industries. A willing, plentiful and well-trained workforce is one, and Professor Ramudhin points to the work that has been done on Humberside to build up skills in wind and alternative energy ahead of Siemens opening of a wind turbine factory in Hull. Nor does the fact that


Liverpool has got in first with developing a major north of


England container hub detract from Humberside and the North-East’s prospects of being able to do the same, Professor Ramudhin adds. The fact that different coasts are served could help container shipping lines rebalance flows – a box used to bring in imports through a North-East port could then


service an export flow from the North of England via Liverpool to the Americas, for example. “I think Liverpool2 will


break the pattern of UK port development, and that’s something that the North-East and Humber can build on. I think the timing is right for the region.”


Twists and turns


Roads are the North of England’s Achilles heel when it comes to logistics, says Professor David Grant of Hull University Business School. While the immediate road system around Teesport and Middlesbrough is excellent, and that around Newcastle at least adequate (other than on days when the Toon are playing at home) some of the longer-distance links leave a lot to be desired, he says. The A1, although upgraded to motorway standard


around the city of Newcastle and further south soon fizzles out into a two-way road north of there. And oſten, the region suffers because vital links


further away from the region are not up to scratch. For example, the road system south of the Humber Bridge is a twisting, two-lane “death highway”. The M62 is getting heavily congested in the Leeds area. The A66 trans-Pennine route from Scotch


corner to Cumbria is arguably one of the better long-distance routes, though even here there are annoying pinch-points that could be ironed out for relatively little money, Professor Grant argues. And in his home city of Hull, successive governments have promised upgrades to the A63 that links the port to the M62, but have failed to actually deliver them.


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