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Issue 6 2015 - Freight Business Journal Keeping up a shipping tradition


///UK NORTH EAST Teesport on brink of a box boom


PD Ports’ port-centric business is really starting to take off – to the extent that it could be the spur for Teesport to start looking at expanding its container berths, says group chief executive, David Robinson. This, together with the expansion of rail services to Teesport “will help us to develop more deepsea capacity and it could put the Northern Gateway back on our agenda,” he told FBJ in an interview. Teesport


is currently handling around


North-east England has a thriving coastal shipping industry and Newcastle ship’s agency and chartering firm Gillie and Blair – which celebrated its 100th anniversary in 2011 - has just added an eighth dry cargo vessel to its fleet. The Sea Melody, at 3,600-tonnes, will in fact be the largest ship in the fleet, reflecting the general increase in the size of vessels in the coastal trades. Most of the other ships in the Gillie & Blair fleet are in the 1,150-2,850t bracket. Once, there were dozens of


companies like Gillie & Blair on the quaysides of Newcastle, in the days when the ships docked in the city centre and the city was the coal capital of the world – today, it is one last survivors. The company started trading coal from North- East England to the Scottish Highlands and Islands and itself operated from the Newcastle quayside until the 1990s, when it relocated to its present location in the Manors district. Major local customers in the


North-East include Grainco in South Shields, the largest grain marketing company in the whole of Europe, and Cleveland Potash. Around 50-60% of Gillie & Blair’s business is contract work, so the company is not exposed to the vagaries of the spot market. “The North-East ports are having quite a decent time at the moment,” says managing director, Stephen Gillie. The port of Tyne has had a record year and Blyth (north of Newcastle) is doing very well in mobilisation and demobilisation for the offshore industry, for instance.” Gillie & Blair’s ships handle a


wide range of cargoes. As well as dry bulks such as grains and fertilizers, it also handles project cargoes for the oil and gas industry and the company has an in-house naval architect to ensure that items are properly secured for sea. The coastal shipping industry


is facing a conundrum, says managing director, Stephen Gillie. On the one hand, bigger ships offer economies of scale over smaller ones. A 5,000-tonner will not cost a lot more to build and operate than a 2,000-tonner, so from a shipping economy of scale point of view, the bigger vessels are clearly the best option. But the bigger ships cannot get


into many of the smaller harbours, and may have to use ports many miles


distant from the cargo’s


final destination. More road miles may be costlier, to say nothing of the ‘green’ aspect. Gillie & Blair’s vessels operate into quite small ports on the North-East coast, such as Berwick-upon-Tweed or Seaham. But very few, if any, ships in the


smaller sizes are being built these days, so replacing them could be a problem – not that Gillie & Blair will face it for around ten years as its fleet is quite modern. “There has been a driſt towards


bigger ships, and we are probably one of the last operators who can get into some of the smaller harbours says Stephen Gillie. “The market is interestingly poised.” Many of the smallest ports and wharves around the UK have closed, or been turned into marinas, as the ships that once serviced them have gone to the breakers. The company has also been


recruiting new staff, including a qualified shipbroker. Finding ready-qualified staff in Newcastle itself


is not easy, says Stephen


Gillie – shipping has become a niche industry in Newcastle, so there is no supply of ready- qualified people from other local firms. “Shipping just isn’t something that a schools career officer recommends these days, unfortunately,” says Stephen Gillie. Recent recruits have come from London, and the company is also happy to train suitable people from scratch.


350,000teu a year through its dedicated container terminal, or 500,000teu a year if traffic on ro ro vessels is added, and current maximum annual capacity will top out at around 650,000teu. “So we’re not a million miles off that at the moment and at current growth rates we would be full in about three years’ time,” David Robinson explains. Containers through Teesport have risen


by 27-28% over the past two years and there’s no sign of the growth slowing down. Some extra throughput can be handled by adding equipment, such as the fleet of new RTGs that has been introduced, followed by a fiſth gantry crane, but beyond this new container berths will be needed. Owners PD Ports has long-cherished plans


to develop a deepsea hub at Teesport and the permissions and Harbour Revision Orders for the Northern Gateway are still in place. That was deferred, but the container market is continuing to mature and ships in Teesport’s existing trades such as the Baltics and Med are getting bigger. Moreover, the ability to handle bigger ships – say, up to around 12,000teu – could open up opportunities in new trades, such as Africa, the Indian Ocean or the Eastern Med. Teesport would be in a good position to attract them, David Robinson argues as, unlike Liverpool, it is on the east coast of the country, convenient for the main shipping trade lanes to the north-west continent. “I think there is huge potential in the mid-market,” he says. The Northern Gateway scheme may


happen in phases – perhaps building one large berth to start with and then adding more capacity as the market develops. Meanwhile, Teesport’s existing container


business is making good progress. The A2B feeder service, started around a year ago, has been stepped up to twice-weekly and existing lines, such as MSC, are putting bigger ships into Teesport. MSC, for example, is now using 2,000teu vessels. The ro ro services, which also handle large


numbers of boxes as well as trailers, have also done well. P&O’s Zeebrugge route is now up to six times a week and the Rotterdam Europort service is running three times a week. Port-centric distribution has been the


foundation of much of this growth. While every manager of a major port claims to have invented the idea of carrying out the sorts of logistics operations - normally associated with inland distribution centres - on or near the dockside, PD Ports and Teesport have a strong claim to be the pioneers.


“The port-centric model has had a very


good run recently and earlier this year we launched Teesport Logistics Park, which is half a million square feet in the initial phase, in plots of 2-300,000sq ſt,” David Robinson explains. The site is now being marketed by estate agents. “The market was over-supplied in the last


five years, with a particular surfeit in South Yorkshire, but that has all been taken up now. We’ve having very good discussions with serious players, and one idea we’re considering is a common user facility. I think we’ve hit the property cycle at the right point and there will be strong demand next year.” Including space at nearby Hartlepool,


off-dock space such as the site at Billingham and that in the hands of third party operators such as Clipper Logistics, there is around 4m sq ſt of space of a port centric nature on Teesside, double what London Gateway would be able to offer at its maximum extent. Development costs are also much lower in the region - “we’ve spent only a fraction of what they have,” points out David Robinson. Recently, in a ‘DC bypass’ exercise,


Clipper Logistics got goods from the ship to a major high street retailer’s stores in 11 hours, including pre-retail work like labelling and tagging. “You couldn’t do that through an inland DC,” comments Robinson, who adds: “Years ago, all the warehouses were at ports, but then they moved inland, perhaps because there wasn’t a full picture of total supply chain costs. Arguably,


it created a


monster that is difficult to change, but I think it will, gradually.” Trains are the other element of Teesport’s


growth. Freightliner has closed its dedicated terminal at nearby Wilton and its own trains and those of other operators now use a new terminal at Teesport itself. A new service between Teesport and lowland Scotland has already started and David Robinson hopes that this will soon be ‘triangulated’ to include links to the south, to the Pennine or Midlands region as well, the aim being to become the best-connected east coast port. The Scottish link has already proved to be a boon, he adds. “The Scottish Whisky Association says we are now their second


largest export port, aſter Grangemouth – we do a lot of trade to Russia and the Baltics.” Containers and port-centric logistics


may be among the most exciting and visible elements of Teesport’s growth, but its prosperity was historically founded on big bulk traffics. It is in fact now the third most important UK port in tonnage terms, handling around 40-41m tonnes a year, the growth being driven by the success of the SSI steel plant at nearby Redcar, along with sizeable traffics in chemicals, oil, coal and biomass. The bulk terminals that import material


for the steelworks are currently one of the major focuses for investment, with the first of a possible three berth reconstructions completed in


June and a commitment


secured to start work on the second. Ship sizes are increasing in the bulk sector too and the work will allow fully loaded panamax ships to be handled. Coal traffic is in decline, as it in in every


other port in the UK thanks to a move away to other fuels for power generation, but as a multi-commodity port Teesport can balance this against gains elsewhere. One developing traffic is biomass for power generation; MGT is poised to develop a £65m station at Tees Dock, which would require around 1.2m tonnes of pellet imports a year. PD Ports has also been developing its


interests outside the North-East. In July, it acquired the Groveport operation on Humberside which David Robinson describes as “a cracking little port.” It currently moves around 800,000 tonnes of cargo a year, specialising in long steel products imported from Europe and also has potential for agribulks, recyclables and other traffics. Nor is it PD Ports’ only operation in the


region. It also operates Hull Container Terminal and has a stevedoring operation in Immingham. It is in fact the Humber’s biggest river port operator. Groveport also has potential to dovetail neatly with PD Ports’ handling contract with Tata steel at Scunthorpe. Further south, PD Ports also operates Felixstowe’s largest off-dock warehouse.


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