Ports at the centre of distribution chains
Before 2008 ports policy and ports’ investment strategies were focussed on trade growth and adding capacity due to pressure from customers (mainly container shipping lines) for more berths, within the context of the Habitats Directives which require Government to be able to justify such investment in environmentally sensitive locations. Since the Great Recession the focus of strategy for the larger UK ports should, arguably, have switched from accommodating growth to winning share in a stable market, adding value through extending roles in supply chains and seeking to exploit the policy need to achieve greater sustainability.
The role of UK ports is mainly to handle imported manufactured goods, as the UK no longer manufactures significant volumes of such products, and imported energy goods. In the energy market, there remain opportunities in the offshore wind market, but less imported coal should be handled in the future and biomass is likely to offer more limited opportunities for traffic and revenue growth; the North sea oil and gas industry is in decline and there are continuing uncertainties in relation to Government energy policy.
When MDS Transmodal completed its UK national port traffic forecasts for the DfT in 2007 (still quoted in the DfT’s Ports NPS, published January 2014), it was in the context of rapid growth in port traffic in the container and RORO sectors because of the gradual substitution of UK manufacturing capacity with imported goods. The original 2005-based forecasts mainly addressed the public interest case and forecast mean growth for all traffic in tonnes of 1.0% p.a. to 2030. However, traffic volumes were severely affected by the 2008-09 economic downturn and fell by 14% in 2009. Tonnages since 2009 have been very stable and, based on our analysis of trade data, growth has returned in 2014.
Despite a more stable market environment and a less urgent need for further port development, port traffic forecasting remains relevant because of the urgent need to develop inland infrastructure to which ports need to have integrated connections - particularly because, if you exclude secondary and tertiary handling of goods, port traffic accounts for more than 50% of all road and rail freight traffic.
MDS Transmodal produced rail freight forecasts in 2014 for Network Rail using its GB Freight Model, but this required us to develop updated forecasts of port traffic up to 2033 and even 2043 based on historic trends for unitload traffics and, as far as possible, on Government policy for energy goods. The model was also used to assign the port traffic to the road and rail network, along with domestic traffic, allowing analysis of capacity constraints. Most road freight traffic growth is likely to be seen on the core motorway network between Dover and the Channel Tunnel and London, on the A14 between Felixstowe and the Midlands, around the northern sections of the M25 and on the M1, M6 and M62 corridors. Almost all of these sections of the strategic road network already suffer from heavy congestion. On the rail network the greatest traffic increase is likely to be seen on the WCML north of Birmingham, on the ECML north of Peterborough and on the routes between these lines and the major deep sea container ports.
UK ports face only modest growth prospects in terms of growth in tonnages, but have more scope than most ports on the continental mainland to engage in commercial activities, while retaining the right to levy dues and charges as they see fit under the Harbours Act. In this context there is an opportunity for the ports to intervene in the market to extend maritime and inland (particularly rail) networks to improve their respective competitive positions in collaboration with existing actors. The prize lies in further penetrating the distribution sector either within port estates (via port-centric distribution) or inland if linked to dry ports. Ports are therefore heavily dependent for growth in added value on inland transport networks and therefore urgently need to engage positively with public sector initiatives to improve rail and road infrastructure.