Forecasting the need for port development in Britain

The NPSP's objective

Port traffic forecasts to 2050

In order to quantify likely need for port infrastructure up to 2050, the DfT has developed a port traffic forecasting model based on a total of 14 cargo categories, grouped into four broad types: unitised freight, liquid bulk, dry bulk, and general cargo. These forecasts are national-level projections and assume unconstrained growth. The forecasts are intended as a benchmark, not a cap, on development and are designed to support the NPSP’s market-led approach, where commercial investment decisions—rather than central planning—drive port expansion, provided environmental standards are met.

In order to take account of inherent uncertainty in forecasting demand over a 27 year period, the forecasts include central, high, and low scenarios based on varying assumptions about GDP, population, and energy transition pathways to Net Zero by 2050.  Just as MDS Transmodal did for the first port traffic forecasts for a generation - developed in 2005-07 - the forecasts used baseline data from the DfT’s Port Freight Statistics and then sought to find suitable economic drivers to forecast forward to 2050. A summary of the central forecasts is provided below.

Total port traffic is expected to grow from 421 million tonnes in 2023 to 454 million tonnes by 2050, an 8% increase over a 27 year period (at an implied compound average growth rate, CAGR, of 0.3%). This is despite total UK port traffic (including minor ports) having declined by 24% (or -1.2% per annum) over the 23 year period since 2000 and 10% (-2.6% per annum) since 2019. Of course, the historic trend does not necessarily need to determine the future, so a more detailed look at the economic drivers behind the forecasts is needed.

Port traffic forecasts

Ro-ro traffic (excluding import/export vehicles) is forecast to increase by 70% (+2.0% per annum), from 91M to 155M tonnes between 2023 and 2050. The overall forecasts (driven by assumed increased GDP per capita) seem high given that this traffic is mainly to/from the European continental mainland and Ireland and these traffics have, at best, stagnated since Brexit. Since 2019 the DfT’s own data suggests RoRo traffic declined by 1.9% per annum between 2019 and 2023; this is due to stagnant economic growth and some switch of traffic to short sea LoLo services.

Container traffic (excluding transhipment) is forecast to increase by 37% (or +1.2% per annum), from 61M to 83M tonnes. Since 2019 the DfT’s historic data suggests that this traffic declined by 2.2% per annum and only grew by 0.7% per annum over the whole period since 2000.

Dry bulk traffic is projected to grow by 62% (+1.8% per annum), from 84M to 136M tonnes. It is not clear where this growth will come from, but the closure of blast furnaces (affecting imported iron ore and coal) should be reflected in the numbers. ‘Other dry bulks’ have grown very rapidly, which DfT has assumed follows the historic trend and it is not clear why. Specifically, the forecast appears to be based on a linear extrapolation of the historical trend from 1994 to 2007. This suggests there is little to no connection between the forecasts and broader economic developments or structural trends influencing port traffic and to use such a historical growth rate to forecasts from 2023 to 2050 should be questioned. Since 2000 the DfT’s historic data suggests that total dry bulk traffic has declined by 19% (-0.9% per annum) and by 9% (-2.2% per annum) between 2019 and 2023 alone; this overall reduction in traffic has been driven by the decline of coal as a source of power station coal and the decline of the UK’s steel industry. Additional biomass traffic for electricity generation and some agricultural bulk imports (the latter driven by population growth) is unlikely to provide sufficient growth to justify long term growth rates of 1.8% per annum; however, the scale of sea-dredged aggregates required for the construction industry (not apparently included in the DfT’s forecasting exercise) may provide additional volumes as quarried aggregates become less available.

General cargo traffic (mainly packaged forestry products and steel and other non-unitised goods such as project cargoes) sees a smaller increase of 12%, attributed to a forecast decline in packaged forestry products and increased transport of such products in unitloads. Traffic related to the development of offshore wind farms (anticipated by Government in the NPSP) should be included in this category, but DfT has not explicitly produced forecasts for this demand because there is “no available data”. This is despite Government being responsible for licensing offshore wind farms that have already been commissioned in the past and for forecasts of new capacity up to 2050.

Liquid bulk traffic (crude oil, petroleum products, chemicals, liquefied gas and other liquid bulk traffics) is forecast to decline sharply by 63.3% (-3.6% per annum), from 169M to 62M tonnes, largely due to the transition to net zero and a forecast decline in the production of North Sea oil and gas. Traffic related to the manufacture and use of hydrogen as a fuel (which might allow for the continuing import of crude oil) has not explicitly been forecast because there is “no available data”. This sector may provide an opportunity for a potential upside for imports of liquid bulk traffics, although demand is relatively uncertain at this point.

Conclusion to DfT Port Traffic Forecasts

The DfT’s conclusion on need is that, “Against this background, the Government believes that there is a compelling need for substantial additional port capacity over the next 30 years, to be met by a combination of development already consented and development for which applications have yet to be received”. 

While it is not surprising therefore that publication of the draft NPSP, with its associated demand forecasts, was accompanied by messages of support from bodies representing the UK ports industry, the commercially-driven UK ports will, in reality, only develop new infrastructure based on an assessment of the potential to make a return for their investors while operating in a competitive market environment.