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CONTENTS 1.
INTRODUCTION ........................................................................................................... 1
2.
MARKET ENVIRONMENT ............................................................................................ 3
3.
POLICY ANALYSIS .................................................................................................... 49
4
ANALYSIS OF PORT SUPPLY & DEMAND ............................................................... 75
5
IMPACT ASSESSMENT.............................................................................................. 81
This study was guided and assisted by a steering group comprising representatives of the Northwest Regional Development Agency, Government Office for the North West and 4NW.
NWDA: North West Ports Economic Trends & Land Use Study
1.
INTRODUCTION
1.1
Aim & objectives of study
Page 1
The Northwest Regional Development Agency (NWDA) commissioned Regeneris Consulting and MDS Transmodal (MDST) to carry out a study of the economic trends and land use requirements of ports in North West England. The study provides an up-date of previous research carried out for the NWDA in 2005. As in 2005, the overall aim of the study was to provide the NWDA and the other key regional partners with an accurate assessment of the key economic trends affecting North West ports and how this translates into port land requirements. The study is designed to provide an evidence base for the development of future regional policy and strategy. 1.2
Scope of research
The geographic scope of the study is focussed on the North West region, although competitive impacts over a wider area have also been considered, depending on the port and shipping market. The time horizon for the study for the purposes of forecasting was 2030, which is line with the time horizon for most of the UK Government’s forecasts, including the national port forecasts. The study includes both freight and passenger port markets, although the major spatial impacts in the long-term are likely to relate to the needs of the freight market. 1.3
Methodology
The project was split into two phases. Phase 1 involved analysis to up-date the evidence base to 2009, including an up-date of market, economic and policy developments. Phase 2 included demand forecasts for the North West ports to 2030 and examined the balance of supply and demand for port infrastructure in the region, with the implications of the analysis for ports in the North West. As well as drawing on the assistance of the members of the Steering Group for the study, Phase 2 included a consultation exercise with the following stakeholder organizations: • • • • • • • • •
Allerdale Borough Council Associated British Ports Association of Greater Manchester Authorities Highways Agency Lancaster City Council Liverpool City Council Mersey Maritime Network Rail Peel Ports
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• • • • 1.4
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Salford City Council Sefton Metropolitan Borough Council The Mersey Partnership Wirral Metropolitan Borough Council Report structure
Chapter 2 Market Environment sets out the economic trends, by key port market sector, that are affecting ports in North West England, including consideration of the impact of the economic downturn that began in the latter half of 2008. It also provides a summary of the regional economic context in which the ports are operating and analysis of the extent to which rail freight distribution parks in the North West compete with, or are complementary to, the North West’s ports. Chapter 3 Policy Analysis provides a summary of key relevant policy documents at a UK and regional level and analyses how these policies might affect the North West’s ports in the future. Chapter 4 Analysis of Port Supply & Demand provides demand forecasts for the regions’ ports as a whole, based on the DfT port demand forecasts produced by MDST in 2005-07 and then provides an analysis of the balance of supply and demand for port infrastructure in North West England up to 2030 for all broad types of port cargo. Chapter 5 Impact Assessment sets out the key constraints and opportunities for each of the commercial ports in North West England and concludes with an assessment of the economic contribution of the ports to the North West regional economy.
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2.
MARKET ENVIRONMENT
2.1
Introduction
Page 3
Chapter 2 provides a discussion at a high-level of the potential impact of the economic downturn on port traffics and then provides an introduction to trends in port traffics at a national level and to the North West ports. It then sets out the economic trends, by key port market, that are affecting ports in North West England, including consideration of the impact of the economic downturn. It also provides a summary of the regional economic context in which the ports are operating and analysis of the extent to which rail freight distribution parks in the North West compete with, or are complementary to, the North West’s ports. 2.2
The economic downturn
Since the summer of 2008 the UK economy has deteriorated quite rapidly and is technically in recession. The economic downturn is largely due to a loss of consumer confidence, linked to a downturn in the housing market, which has, in turn, led to a reduction in construction activity. The reduction in the availability of credit and the lack of consumer confidence has led to a sharp fall in the sale of new cars. In parallel, sterling has lost value against the euro, as the foreign exchange markets have expressed their greater confidence in the resilience of the euro-zone economies compared to the UK economy, which is based to a greater extent on the hardest hit finance and construction/housing sectors. There is also a recession in the Republic of Ireland, which has been suffering from a reduction in consumer demand and a slump in house prices and construction; according to the OECD the Irish economy will shrink by 1.7% in 2009 and the unemployment rate in the ROI has increased from 4.4% in 2006 to 5.9% in 2008 and is expected to rise to 7.9% in 2010. Growth in unitised trade through North West ports up to 2007 is linked to increasing prosperity and the lowering of trade barriers, greater integration of the UK and Irish economies into the continental and world economies and the availability of cheap maritime transport. The European Single Market has allowed manufacturers to secure economies of scale by manufacturing a particular product in a single factory in (say) the Czech Republic and then distributing them to all the different national markets without tariff barriers and using relatively cheap freight transport. Similarly, the opening up of the Chinese economy and its entry into the World Trade Organisation has allowed manufacturers to source their products from factories in China and relatively cheap deep sea container shipping has allowed their cost-effective distribution to Western European and North American markets. Table 2.1 shows the OECD’s projected GDP growth rates for the UK, Ireland, the United States, the Eurozone and China for 2008, 2009 and 2010.
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Table 2.1: Projected GDP growth rates in 2009 & 2010
UK Ireland United States Eurozone China
2006 +2.8% +5.7% +2.8% +3.0% +11.6%
2007 +3.0% +6.0% +2.0% +2.6% +11.9%
2008 +0.8% -1.8% +1.4% +1.0% +9.5%
2009 -1.1% -1.7% -0.9% -0.6% +8.0%
2010 +0.9% +2.6% +1.6% +1.2% +9.2%
Source: OECD Economic Outlook November 2008
The OECD believes that the UK, Ireland and the rest of the Eurozone and the United States will be in recession in 2009, while China’s GDP growth rate is expected to slow from almost 12% in 2006 to 8% in 2009. China’s containerized trade continued to grow up to the 3rd quarter of 2008, but then fell by 11% in the 4th quarter; it is likely to continue to fall in the short term. The United States’ containerized trade fell gradually throughout 2008 compared to the previous year and declined by 11% in the 4th quarter. Historically, economic downturns have led to temporary reductions in traffic volumes, followed by quite rapid recoveries. The OECD’s projections suggest that economic growth is most likely to start to rebound in 2010, but it admits there is considerable uncertainty and that the, “distribution of risk around the projection is wide. In 2009 these risks are skewed on the downside.”1 Future economic growth is likely to e assisted by lower oil prices: the price of oil has fluctuated significantly in 2008, rising from $80 a barrel in September 2007 to $140 in early July 2008 and then fell back to about $50 a barrel in March 2009 as the world economy has slowed. The lower price for this commodity will have the effect of easing cost pressures on shipping lines and road hauliers, as well as helping to reduce household costs and therefore expand consumer expenditure on non-energy goods. The potential impact of the downturn is considered on a sector-by-sector basis below, although much of the evidence is anecdotal because of the inevitable delay in the availability of official traffic statistics. However, the downturn in the real economy in Western Europe and the United States has led to a reduction in the demand for consumer goods and is therefore likely to be having a significant impact on deep sea container and short sea RoRo traffic volumes passing through GB ports. In addition, port traffics for a regional hinterland that are linked to the construction and automotive industries (such as aggregates, timber and steel) are also likely to be declining in 2008-09. Table 2.2 provides an analysis of non-EU trade statistics (in terms of tonnes handled) through North West ports and the rest of the UK for 2007 and 2008. The analysis shows that for non-EU trade, the North West ports have seen a smaller increase in trade than the rest of the UK: overall, total trade between the UK and non-EU countries increased by some 5% in 2008, while the increase in trade in terms of tonnes for the North West ports was 1%.
1
OECD Economic Outlook November 2008
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Table 2.2: Non-EU trade through North West Ports 2007 & 2008 Thousand tonnes 2007
Liverpool Other NW Total NW ports All other UK ports Total UK trade
Imports 13,442 101 13,543 174,211 187,754
Exports 2,458 82 2,540 29,155 31,695
2008 Total 15,900 183 16,083 203,366 219,449
Imports 12,493 965 13,458 170,920 184,378
% Change 2007-08
Exports 2,756 57 2,813 43,509 46,322
Total 15,249 1,022 16,271 214,429 230,700
-4% +459%* +1% -5% +5%
* The significant increase in 2008 is due to additional imports of crude oil from non-EU locations to Ellesmere Port on the Manchester Ship Canal. Source: MDS Transmodal, based on HM Revenue & Customs data
Table 2.2 shows how the fall in the value of sterling in 2008 appears to have boosted UK exports, with a 49% increase in terms of tonnes compared to 2007. 2.3
The UK ports industry: key trends
GB Port traffic development In 2007 the UK ports industry handled 582 million tonnes of traffic, compared to some 556 million tonnes in 2003, amounting to 4.9% growth over the four-year period. This is roughly in line with the average growth in UK port traffic of 1% per annum that has been maintained since 1990.
Figure 2.1: UK Total Port Traffic 2003-07 Source: DfT Maritime Statistics 700,000
Thousand tonnes
600,000 500,000 Domestic
400,000
Exports
300,000
Imports
200,000 100,000 2003
2004
2005
2006
2007
Figure 2.1 shows that there has been a slight decline in total UK port traffic since 2005, with the decline in exports and domestic traffic having a greater impact than the significant increase in imports from 229 million tonnes in 2003 to 273 million tonnes in 2007. This is Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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largely due to the decline in the landing of North Sea crude oil, which mainly affects east coast ports.
Figure 2.2: Imports & exports through UK ports 2003-07 Source: DfT Maritime Statistics 300,000
Thousand tonnes
250,000 200,000 Imports
150,000
Exports
100,000 50,000 2003
2004
2005
2006
2007
The balance of trade in terms of tonnes between 2003 and 2007 is shown in Figure 2.2. Imports have increased by some 19.2% during the period 2003-07, while exports have declined by 5.4%. There have been significant differences between the performances of the different cargo groups over the period 2003-07. Liquid bulks have declined by 12 million tonnes due to the decline in the landings of North Sea oil, while dry bulk traffic has increased by 11 million tonnes. At the same time unitised cargoes have increased by 27 million tonnes. Figure 2.3: Composition of UK port traffic by mode of appearance 2003
Figure 2.4: Composition of UK port traffic by mode of appearance 2007
Source: DfT Maritime Statistics
Source: DfT Maritime Statistics
5%
5%
16% Liquid bulk
18%
Liquid bulk
Dry bulk 48%
10%
44%
Containers RoRo
Containers 11%
RoRo
Other general cargo 21%
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Dry bulk
Other general cargo 22%
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As shown in Figures 2.3 and 2.4, liquid bulk cargoes (mainly crude oil and oil products, liquid gas and chemicals) continue to represent the largest proportion of all port traffic in 2007. However, the composition of UK port traffic has shifted towards the unitised sector, which has increased from 26% of total traffic in 2003 to 29% in 2009. Figure 2.5: Origin/destination of UK port traffic 2007 Source: DfT Maritime Statistics
24% 41%
EU Non-EU short sea Deep sea Domestic
22% 13%
Over half of all port traffic in the UK in 2007 was orientated towards the EU and other short sea markets. A further 24% related to domestic coastal shipping, which is mainly related to movements of crude oil and oil products. Deep sea trade accounted for just over one-fifth of all UK port traffic. The leading UK ports in terms of traffic volumes are listed in Table 2.3. Grimsby and Immingham and Tees and Hartlepool are the UK’s two major deepsea ports, with large oil and bulk ore terminals within the port complexes. Most of the North West region’s ports continue to be focused largely on the short sea and domestic shipping markets, with only Liverpool having any significant presence in deep sea markets. Liverpool is ranked 7th in the UK in terms of overall tonnage and is ranked 6th for non-oil traffic after Grimsby & Immingham, London, Felixstowe, Dover and Tees & Hartlepool.
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Table 2.3: UK major port traffic ranked by traffic volume, with area of loading/discharge, 2007 Million tonnes Rank 2007 Port
Total Domestic
Short sea
Deep sea
% non-oil
1
Grimsby & Immingham
66.3
9.2
38.2
18.9
64%
2
London
52.7
12.6
33.0
7.1
65%
3
Tees & Hartlepool
49.8
12.5
24.8
12.4
46%
4
Southampton
43.8
7.1
20.7
15.7
33%
5
Forth
36.7
10.3
22.0
4.4
14%
6
Milford Haven
35.5
11.4
19.4
4.7
4%
7
Liverpool
32.3
7.5
15.6
9.2
67%
8
Felixstowe
25.7
0.7
7.8
17.2
100%
9
Dover
25.1
0.3
24.6
0.3
100%
10
Sullom Voe
16.6
6.4
5.2
5.0
1%
19
Manchester
8.1
2.0
5.8
0.3
41%
26
Heysham
3.6
3.1
0.5
0.0
100%
Source: DfT Maritime Statistics
The three leading ports in the North West of Liverpool, Heysham (ranked 26th out of 51 “major” ports, according the DfT’s definition) and the Manchester Ship Canal (ranked 19th) account for 28.7m tonnes of non-oil traffic, which represents 8.6% of the UK total for ports of over 1m tonnes annual throughput. The smaller ports of Fleetwood, Garston, Lancaster, Barrow, Workington and Silloth account for a further 3.0m tonnes of cargo together, with Fleetwood alone contributing 1.8m tonnes. The orientation of trade is highlighted in Table 2.3 because the profile of ships involved in the deep sea or short sea trades is quite different and has a significant bearing on the requirement for port facilities, as well as port productivity and overall port capacity. 2.4
Regional economic context
Introduction The economic performance, positioning and prospects of the North West have important direct and indirect implications for the performance of the region’s ports. Changes in the level and nature of economic activity (both production and consumption) can change the nature and volume of traffic at the region’s ports. However, it is important to remember that the region’s ports serve wider national and international markets (particularly the Port of Liverpool) and that the needs of the region’s manufacturers and consumers are also met via ports outside of the North West. Recent Economic Performance In this section we consider the recent economic performance of the region, drawing on a range of official statistical datasets. The extent to which these datasets can reflect the rapid economic downturn and the move into recession is limited due to time lags in the collection and collation of official economic statistics at regional level. One of the most robust and Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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responsive indicators of recent events is the unemployment claimant count. Nationally claimant levels have increased by over 45% in the year to January 2009, while across the North West claimants have increased by almost 44%. The performance of the region’s economy had improved significantly in relative terms in the period 2003-07, in common with other northern regional economies. Over the period 2003 to 2007, 63,000 additional jobs were created in the region. Significantly, over the same period, the North West experienced a greater increase in the percentage change of those employed in broadly defined knowledge based industries (KBIs, OECD definition, 2003) than the UK. An 8% increase for the North West compared to 6% over the 5 year period for the UK indicates that the region had been making the progress required to begin to close the region’s output and productivity gap. No significant progress appears to have been made in closing the gap. The region’s percentage growth of GVA over the period 2003-07, at 25%, lags only slightly behind the UK’s 27%, matching national per annum growth rate each year from 2003 until 2006, with a 1% drop on UK percentage growth between 2005 and 2006, only to match percentage growth again over the period 2006-7. The percentage growth of GDP per capita for the North West over the period 2003-07 mirrored the UK’s % growth, however, with the highlight of a 1% greater increase on the UK’s yearly growth rate in the period 2006-7. The North West’s total GVA of £119bn in 2007 represented an output gap of £3,000 per head of population. Thorough examination of the output gap by NWDA indicated that in 2008 the gap stood at approximately £17bn. At present, this gap is likely to consist of four main sources: • • • •
£4bn due to a lower employment rate; £5bn due to price differences; £5bn due to real differences in labour productivity; and £2bn due to the industry mix and a further £1bn due to sector specialisation (i.e. the extent to which the region has or has not achieved specialisation in the sectors in which it is more productive). In the period 2000 to 2006, the North West productivity (GVA per hours worked) relative to the UK average, has fallen behind both the East Midlands and West Midlands, ranking 8th out of the nine English regions, though ahead of both Wales and Northern Ireland, and Yorkshire and the Humber.
Nationally, the rate of GDP growth per head may be slowed somewhat over the course of the next economic cycle, reflecting the turmoil in the financial sector and the likelihood of a future more aggressive and cautious approach to regulation. This may curtail the rate at which regional disparities in GVA per head continue to grow. The region performed better than the West Midlands and Yorkshire and the Humber only in terms of headline Gross Disposable Household Income per head (GDHI) in 2006, having increased at an average annual rate of 4% between 2000 and 2006; the same rate of GDHI Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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growth as London, the South East and the UK. The region remained £1,100 per head below the UK GDHI per head in 2006, however, and £4,200 below the equivalent amount per head of population for London. In the third quarter (Q3) of 2008, the North West region had the third highest working age unemployment rates in the UK. Over the one year period between 2007 Q3 and 2008 Q3, unemployment rates increased by 1% in the region to 7%, whilst employment rates remained static at 72%. Economic inactivity rates did not change over the same year, staying at 23% in 2008, reflecting the joint highest economic inactivity rates in the UK along with the North East, West Midlands and London. Table 2.4: Pattern of Sectoral Employment Change, North West 2003-2007 Employment Growth 2003-2007 Major Regional Employment Growth (over 10,000 jobs)
Significant growth (4,000 to 10,000 jobs)
Significant Decline (4,000 to 10,000 jobs)
Change much better than National rate (over 10%)
Change similar or slightly better than National rate Construction Other Business activities Education Health and Social Work Activities auxiliary to Real Estate activities financial intermediation Computer and Related activities Public Administration and Defence Recreation, Cultural and sporting activities Sale, maintenance and repair of motor vehicles Supporting and auxiliary transport activities
Change worse than National rate (by over 2%)
Manufacture of Food and Beverages Manufacture of Textiles Manufacture of Chemicals Retail Trade Post and Telecommunications Other Service Activities
Table 2.4 above sets out the pattern of employment change for the sectors in the North West over the period 2003 to 2007. This highlights the concentration of employment growth amongst financial services, particularly auxiliary activities, whilst significant employment decline has been concentrated amongst manufacturing, production and retail sectors but also some specialist service sectors such as Telecommunications. A number of these sectors that have been declining in terms of employment are heavy users of the region’s ports including, for example, Chemicals and Food and Drink; however this does not necessarily mean that traffic volumes through the region’s ports will fall in the future and Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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these sectors remain competitive and contribute significantly to regional GVA. A number of the growing sectors create a demand for port services, in particular for imported goods (e.g. computer related services and construction) although these are probably more likely to enter the region from a port outside of the region. Sectors with some considerable, but not overwhelming growth include: manufacture of transport equipment, air transport and collection purification and distribution of water. Transport and related activity has shown some growth in the region over the period, a positive development in the context of the region’s proposed SuperPort scheme and ports and port land accessibility or enhancement activity. The following competitive sectors account for 55% of North West GVA, are knowledge based, and were considered in the 2003 Regional Economy Strategy to have international growth potential for the region: • • • • • •
Biomedical (biotechnology, pharmaceuticals & medical devices); Energy & environmental technologies with increasing focus on promoting sustainable development; Advanced engineering and materials including chemicals, aerospace & automotive; Food & drink; Digital & creative industries; Business & professional services.
The region has the biggest film and television production industry outside London, which is set to increase with the BBC’s imminent move to Manchester, and the development of the MediaCity: UK Zone around Salford Quays (with many of the construction materials to be shipped via the Manchester Ship Canal). Manchester Airport is the largest outside the South East, and Liverpool John Lennon Airport is increasing its inbound and outbound passenger capacity year on year: an 11% increase to 5.5 million in 2007 from the previous year. Provisional numbers for 2008 indicate a further increase; passengers in January-March were 1,235,924, compared to 1,174,831 for the same period in 2007. Areas such as Cheshire, southern Greater Manchester, Liverpool and Manchester city centres are continuing growth, although the North West has the highest proportion (1,420, or 31.8%) of Local Super Output Areas (LSOAs) measured as being within the most deprived 20% of LSOAs in England, of which there are 6,496. Furthermore, the region has over 400,000 incapacity claimants. Sub-regional performance Looking at the North West’s sub-regions individually, the key messages in terms of recent economic performance include:
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•
•
•
•
•
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In 2005, Merseyside was significantly below the UK average productivity, having experienced a relative decline in productivity between 2002 and 2005. Merseyside experienced the lowest percentage increase, 11.7%, in total GVA of all the North West sub-regions over the period between 2003 and 2006, and its total GVA currently lags behind the other sub-regions excluding Cumbria, although per head GVA increased at a rate higher than that of Lancashire 2003-2006. Whilst Cumbria’s poor economic performance in GVA terms remains considerable, the sub-region’s GVA growth over the period 2003-2006 increased at a rate second to that of Cheshire only. Employment in broadly defined knowledge based industries has remained largely the same in 2007 as it was in 2003, with a peak in 2004. Employment in some specialist manufacturing sectors, utilities and some business services (real estate and activities auxiliary to financial intermediation) and has experienced a considerable percentage increase on 2003 levels, although this is offset by a decline in a number of other manufacturing sub sectors and retail. In Cheshire & Warrington, employment in broadly defined KBIs in 2007 had increased nearly 15% from 2003; nearly twice the NW average growth rate and just under three times the UK average percentage growth. In Warrington, some specialist manufacturing sectors, wholesale trade and health and social work sectors have increased employment over the period 2003 to 2007. Growth in service activity more generally has been positive over the period, accounting for over 50% of total employed in the sub region in 2007. Total GVA in Greater Manchester, which still accounts for the largest portion of North West GVA, experienced a slight increase in growth rate in the period 2005-6 from 4% growth per year between 2004 and 2005 to nearly 5.1%. The sub-region employed around 250,000 in broadly defined knowledge based industries in 2007, an increase of more than 4% on 2003. A total of 525 more new business registrations in 2007 than 2003 in the sub-region represent a percentage increase of just below the North West average. The Lancashire NUTS-2 area recorded an average household income for 2008 of £31,800, which represents a 1.5% increase on 2007 totals. In comparison, the North West average for 2008 was £32,200 whilst the GB figure was £34,400. The subregion has experienced the third highest absolute GVA increase over the period of all of the North West sub-regions, but the second lowest % change between 2003 and 2007 indicating it is growing at a slower rate than other areas in the region.
Investment Relative to services, manufacturing accounts for a smaller and decreasing proportion of Net Capital Expenditure in the Northwest region. Sectors such as energy, water etc. have far higher investment rates. In 2007, there were some 2,000 foreign direct investment businesses in the North West, employing 321,300 staff (13% of the total) and accounting for 17% of the region’s GVA.
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Investment in the North West Regional Development Agency (RDA) has seen an increase on 2005-6 levels by 5.2% to £402 million in 2007-8. The region has England’s greatest proportion (17%) of total government RDA investment, receiving approximately 7% more funding than the next highest-funded RDA, the London Development Agency, and around 11% more of the total funding (almost twice as much in actual value) than the RDA with the lowest proportion of funding, the East of England RDA. Trade Trade flows to and from the North West clearly provide one of the most important sets of indicators when considering the performance of the region’s ports, although it is important to remember that the region’s ports serve wider national and international markets (particularly the Port of Liverpool) and that the needs of the region’s manufacturers and consumers are also met via ports outside of the North West. Information on the trade of visible goods is available from HM Revenue & Customs. The total value of exports from the North West in 2008 was £23,509m, making the region the most important exporting region in the north of England and the third most important exporting region in the UK (after the South East and London). Between 2005 and 2008 the value of exports rose by £4,202m or 22%. This represents an annual average increase of 6.8% compared to 5.3% in the UK. Table 2.5: Exports (in £m) 2005-08 Change 2005-2008 Region
2005
2006
North East 8,379 8,460 North West 19,307 23,740 Yorkshire and the Humber 11,873 12,663 UK 211,756 243,821 Source: Regional Trade Statistics, HMRC 2009
2007
2008
£m
%
9,576 11,231 20,997 23,509 12,811 13,884 219,919 247,349
2,852 4,202 2,011 35,593
34% 22% 17% 17%
Annual Average Change 10.3% 6.8% 5.4% 5.3%
The total value of imports to the North West in 2008 was £25,507m, making the region the largest importer (by value) in the north of England and the fourth most important in the UK (after the South East, London and East). Between 2005 and 2008 the value of imports rose by £5,889m or 30%. This represents an annual average increase of 9.1% compared to 7.7% in the UK.
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Table 2.6: Imports (in £m) 2005-08 Change 2005-2008 £ million Region 2005 2006 2007 2008 £m % Annual Average Change North East 6,270 6,178 7,629 9,107 2,837 45% 13.2% North West 19,618 21,693 21,484 25,507 5,889 30% 9.1% Yorkshire and the Humber 12,832 14,083 15,620 16,619 3,787 30% 9.0% UK 272,287 301,964 310,760 340,002 67,715 25% 7.7% Source: Regional Trade Statistics, HMRC 2009
As shown in Figure 2.6, during the period 2005-08 the North West switched (although not for the first time) from being a net exporting region to a net importing region (in terms of overseas trade by value). Figure 2.6: Balance of Overseas Trade, North West 2005-08
Source: Regional Trade Statistics, HMRC 2009
Figures 2.7 and 2.8 below show the quarterly change in the value of imports and exports for regions in the North of England. Q4 2008 saw a reduction in the total value of overseas exports from the region of 8% on the previous quarter and a 2% reduction in the value of imports on the previous quarter. The economic downturn has important implications for global trade. The impact of these on shipping levels is discussed in sections 2.5-2.11 below. Clearly, reductions in the value of sterling relative to other major currencies has the potential to have a marked impact upon both levels of imports and exports through the region’s ports and the total value of overseas
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imports and exports to the region. Q4 2008 trade statistics appear to show the emerging impact of this downturn in trade. Figure 2.7: Imports to the North West (Quarterly, ÂŁm) 2007-2008
!" #
Source: Regional Trade Statistics, HMRC 2009
Figure 2.8: Exports from the North West (Quarterly, ÂŁm) 2007-2008
!" #
Source: Regional Trade Statistics, HMRC 2009
There is the sense amongst many observers that the core of UK manufacturers have successfully innovated and re-cast their production processes to address threats from competition by lower cost foreign producers and the high strength of sterling in recent years, developing good export competitiveness. The indication is that exports increased in line with the expansion of the world economy, increasing levels of international trade in line with
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globalization. However, the impact of the economic downturn is likely to reverse some of this confidence for prospects in the short to medium terms. Future Economic Prospects The Northwest Regional Economic Forecasting Panel produces long-term forecasts and short-term forecasts (for the next three years) every six months. Long-term forecasts were last produced in 2007 and although their projections for the near term are likely to now be unachievable (in light of the pace and extent of the worsening of prospects during 2008) they are likely to continue to provide a reasonable assessment of longer-term performance. The Panel forecast that GVA in the region will grow by 2.0% per annum between 2006 and 2026, compared to 2.5% per annum in the UK. This compares to regional growth of 1.8% per annum between 1990 and 2006 and 1.5% between 2000 and 2006. Productivity (measured as GVA per job) is expected to grow by 1.6% annum on average between 2006 and 2026 compared to 1.9% per annum in the UK. Rather than achieving convergence in GVA per job over this period with the UK, the North West is expected to fall further behind. GVA in the North West is estimated by the Panel to be currently circa 86.5% of the UK average and this gap is therefore expected to widen over this period. However, if increased regulatory scrutiny does restrict the rate of growth in international financial services this may constrain UK output growth (compared to past performance) and limit divergence between productivity in the North West and the UK. Implications for the Region’s Ports So what are the implications of the region’s recent performance and future prospects for the region’s ports? The first thing to note is that the performance of the region’s economy is only one factor influencing the performance of its ports. Needless to say, there are other national and international considerations that exert a very significant influence on the performance of these ports, but in addition some of the region’s ports serve markets well beyond its immediate boundaries. We believe the key implications of the region’s performance and prospects are: •
•
The continuing shift from manufacturing activity to the service sector across the North West is expected to reduce both the imports of raw materials and exports of manufactured goods to and from the region’s manufacturers. In terms of sectoral composition (and the % of employment and output accounted for by manufacturing), the North West increasingly mirrors that of the UK. The gradual improvement in the region’s prosperity together with the reduction in UK’s manufactured output will lead to an increase in the import of manufactured consumer goods from elsewhere in the world. Some of this increase in imports will come through the region’s ports, but also through the South East ports.
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•
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The prospects of some specific sectors may have a significant impact upon particular ports where there is a heavy dependence upon the activities of these sectors. This dependence is far more likely to exist where the ports are relatively small and/ or specialised in terms of their total volume of freight (e.g. the ports of Barrow, Workington).
In practice it is very difficult to draw out the implications of the region’s economic prospects for transport and land use and the possible knock-on effects for the region’s ports. However we have noted a number of issues that could have an indirect impact: •
•
•
•
2.5
The region’s core cities have experienced strong employment growth in recent years and this has lead to an increased take-up of employment land. In some parts of the region (e.g. land adjacent to the Manchester Ship Canal) this has lead to competing demands for land that might previously have been freely available for port uses. There will be significant changes in the patterns of economic activity by sector over the next couple of decades, releasing yet more previously developed land and changing the spatial and site-specific pattern of property demand. Some of this land may be in the immediate proximity to the region’s ports and provide scope for re-use for port related activities - a continuation of a trend which has been occurring in some locations, such as the Port of Liverpool, for a number of years. The growth in higher-level skills in the workforce will tend to lead to longer commuting patterns and use of the car (other things being equal). This could contribute to increased congestion, although its impact on the access to the region’s ports might be limited. Over the medium and longer terms this could also lead to longer peak travelling periods, particularly on the highways network, as well as an increase in the use of rail services to access city centre employment. Growing incomes, increased leisure activity and the popularity of waterfront locations have led to the development or proposals for mixed use development schemes on former port land. This trend is likely to continue especially where port land is freed up in the main urban areas (and hence demand for other uses is strong). There are a number of major proposed residential, office and leisure developments proposed and being taken forwards on former (or potentially vacated) port land. North West Ports
Introduction Table 2.7 provides an analysis of the North West ports’ freight traffic in 2007, the latest year for which port traffic statistics are available.
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Table 2.7: North West Ports, Total Tonnes & Unitised Tonnes, 2007 Thousand Tonnes Owner Peel Ports ABP Peel Ports
Liverpool Garston Manchester Ship Canal Fleetwood ABP Lancaster Trust Port Heysham Peel Ports Barrow ABP Workington Cumbria CC Silloth ABP Total Source: DFT Maritime Statistics
Total Tonnes 32,258 515 8,079
Unitised Tonnes 12,028 3
1,772 123 3,586 192 182 180 46,887
1,772 3,336 17,139
In 2007 the North West’s ports handled some 47 million tonnes of freight, of which some 17 million tonnes (37%) were unitised – either deep sea and short sea container traffic or Irish Sea ferry traffic; about 29% of total UK port traffic is unitised, so the North West is more reliant than the UK as a whole on unitised port traffic. Since 2003 (the most up-to-date data that was available for the 2005 study), total traffic through NW ports has increased by 4.8%, while unitised traffic has risen by some 15.8% demonstrating the relative dynamism of the unitised traffic sectors. Economic downturn reduced total North West port tonnes in 2008 to around 45.7m tonnes of which 16.3m tonnes were unitised.
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North West ports & their hinterland connections
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99% of the North West’s total and all of the region’s unitised traffic is handled through privately owned ports. Peel Ports is the most significant port operator in the region, owning Liverpool, Birkenhead, Tranmere, Heysham and the Manchester Ship Canal. ABP owns four relatively small ports in the North West (Barrow, Silloth, Fleetwood and Garston) and the Victoria Group owns a small port at Bromborough. Lancaster is a small trust port and Workington is a municipal port. The ports can be split geographically into three areas: • • •
The Mersey port facilities, extended inland by the Manchester Ship Canal; The Lancashire ports of Fleetwood, Heysham and Lancaster; The Cumbrian ports of Barrow, Silloth and Workington.
Some of the key characteristics of the ports in each area are summarized below. The Mersey ports The “Port of Liverpool” in the DfT statistics consists of a number of separate facilities: •
• •
•
•
Liverpool is a deepwater port that handles a very wide range of bulk, RoRo and LoLo traffic, with a central location in Great Britain for inland distribution by road and rail. It is the North of England’s major deep sea container port by traffic volume and has secured the required permissions to develop a riverside post-panamax deep sea container terminal. In the Irish Sea RoRo freight market Liverpool is the most important RoRo freight port on the Irish Sea in terms of traffic volume, although it is less important in the passenger market. Dry bulk traffic is dominated by coal, grain, animal feed and fertiliser imports and scrap metal exports, all of which are relatively secure because of the large size of vessel that the port accommodates. A wide range of specialised liquid bulk cargoes are handled at tank farms in Liverpool and the port has recently opened a fresh produce terminal. Tranmere Oil Terminal is solely concerned with the import of crude oil, forwarding the oil by pipeline to Shell’s Stanlow oil refinery. The Twelve Quays (Birkenhead) riverside RoRo terminal has 24-hour unrestricted access direct to the sea and proximity to major markets and is probably the best appointed RoRo facility in the North West. Birkenhead Docks enjoy quite deep water, but are dominated by the Port of Liverpool, which has an almost identical hinterland for the range of cargoes Birkenhead Docks can handle and which enjoys considerable economies of scale. Bromborough handles a number of minor bulk flows on a riverside berth, competing in the local “small ports” market.
Garston enjoys quite deep water and is well located to serve the M62 Corridor market. It is dominated by the Port of Liverpool, which has an almost identical hinterland for the range of cargoes Garston can handle and which enjoys greater economies of scale. Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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The Manchester Ship Canal has a number of facilities that mainly handle petroleum and chemicals. The owner, Peel, has sought planning permission to develop a major tri-modal distribution park at Port Salford to serve the general distribution market and also has plans for further Canal-side facilities at Port Wirral and Port Warrington. Lancashire ports Fleetwood is an Irish Sea RoRo port with a single service provided by Stena Line to Larne in Northern Ireland. The port has restricted maritime access to receive RoRo vessels and the ships operated by Stena Line are close to the end of their useful economic lives. The port experiences strong regional competition from Heysham and Liverpool, as well as from the Northern Corridor routes from South West Scotland to Northern Ireland. Heysham has three ferry operators, two serving the Irish market and one providing a service between the GB mainland and the Isle of Man. The port experiences strong regional competition from ports to the north and south. The major constraints relate to maritime access, although one of the RoRo operators, Seatruck, is introducing new “Heysham-max” vessels to maximise the economies of scale from using the port. Planning permission has been provided for the Heysham-M6 link road, which will improve the port’s road access to the core motorway network. Lancaster/Glasson Dock: The port has restricted maritime access, has relatively poor road access and is reliant on a single major customer. Cumbrian ports Barrow enjoys deep water and has some effectively tied traffics related to the offshore sector and the nuclear industry. It handles a few cruise port calls each year and some low volume bulk traffics. However, the port otherwise has a relatively poor hinterland and is remote from major markets. Silloth has restricted maritime access and relatively poor road access to the port. The port has a relatively poor sub-regional hinterland, but has a well-established major customer. Workington, which is owned by Cumbria County Council, has a more stable financial position than historically and some capital investment has been made in the port’s infrastructure through the West Lakes Renaissance URC. The port is remote from major population centres and has a relatively poor hinterland, apart from its local industrial hinterland. It has reasonable road links, particularly via the A66, and an operational rail link. Table 2.4 provides an analysis of the hinterlands of the North West ports collectively by mode of appearance in 2007, compared to the hinterlands of ports in the North East and
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Yorkshire and the Humber. Only traffic that is distributed inland is shown i.e. excluding, for example, liquid bulk traffic that is stored in a port-based tank farm. The hinterland of North West ports Tables 2.8 and 2.9 provide an analysis of the hinterland of North West ports compared to the other three regions in the North of England and on a NW port-by-port basis respectively. The statistics in Tables 2.8 and 2.9 have been generated by MDST’s GB Freight Model (GBFM), which is used by the DfT as the freight module in its National Transport Model. The statistics show the importance of the North West ports to the national freight market and the volume of traffic that is handled for regions beyond the North West – in effect describing the extent of the ports’ national hinterland. The analysis in Table 2.8 shows that, while bulk traffics in all three regions are largely distributed within the relevant ‘home’ region or neighbouring northern British regions, the North West unit load ports collectively serve a GB national hinterland to a greater extent than unit load ports in the other Northern English regions. While 70% of LoLo traffic through Liverpool is distributed to Northern Britain (the three northern English regions and Scotland), 23% is for Central Britain (Wales, the East and West Midlands and the East of England) and 6% for Southern Britain (Greater London, the South East and the South West). By comparison, 97% of the North East ports’ LoLo traffic is distributed to Northern Britain (43% to the North East itself), while the corresponding figure for Humberside ports is 84%, with 15% distributed to Central Britain and 1% to Southern Britain. In the case of RoRo truck and trailer traffic, the North West ports play a genuinely national role. 28% of the North West’s accompanied RoRo traffic is distributed to and from Southern Britain and 43% to and from Central Britain, while the corresponding figures for Yorkshire and the Humber are 0% and 6% respectively; the North East’s accompanied traffic is dominated by flows to Scotland and the North East. For unaccompanied RoRo traffic, the North West is serving a national hinterland with 21% of the region’s accompanied RoRo traffic distributed to and from Southern Britain and 41% to Central Britain and only 38% to Northern Britain. While the North East’s traffic is dominated by flows to and from the North East and Scotland (together 89% of total traffic), the Yorkshire and the Humber region is mainly serving the M62 Corridor (72% of unaccompanied traffic) and Central Britain (18%). These statistics for LoLo and RoRo traffic reflect the fact that the North West has a deep sea container port that serves the whole of Britain and RoRo ports that act as gateways for Britain’s RoRo traffic to and from Ireland. There remains therefore an important distinction between the role played by ports in the North West (and principally Liverpool) and those in the North East and on the Humber. East coast ports play a very important ‘super-regional’ role in providing access for general cargo for all of Northern England and parts of the Midlands to the Northern Continent, Scandinavia and the Baltic; these ports also serve a number of heavy industrial plants that play a major Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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role in Northern England’s economy. By contrast, ports in the North West tend to play a national role for particular forelands (North America and Ireland), rather than a mainly ‘super regional’ role; North West ports serve only one refinery and no steel works, whereas Northern England’s east coast ports serve three refineries and two steel plants.
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Table 2.8: Hinterlands of ports in Northern England, by region and maritime mode of appearance, 2007 Inland Region Maritime Mode E Mids E of Eng Gtr Lon NE NW Scot SE Lolo 6% 3% 0% 3% 41% 1% 2% Accompanied HGV 10% 23% 4% 1% 14% 0% 23% Unaccompanied trailer 10% 22% 3% 1% 16% 0% 16% Bulk 9% 7% 0% 2% 44% 1% 2% Total NW 9% 12% 2% 1% 33% 1% 8% North East Lolo 1% 1% 0% 43% 24% 10% 1% Accompanied HGV 0% 0% 0% 37% 8% 55% 0% Unaccompanied trailer 0% 0% 0% 62% 9% 27% 0% Bulk 5% 1% 0% 35% 18% 8% 0% Total NE 4% 1% 0% 39% 17% 11% 0% Yorks. & Humber Lolo 9% 1% 0% 3% 32% 1% 1% Accompanied HGV 5% 0% 0% 3% 30% 1% 0% Unaccompanied trailer 7% 3% 1% 4% 26% 2% 3% Bulk 12% 5% 0% 2% 19% 1% 1% Total Y&H 9% 4% 0% 3% 24% 1% 1% Grand Total 8% 7% 1% 9% 26% 3% 4% Source: MDS Transmodal GB Freight Model Port Region North West
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SW Wales W Mids Y&H Grand Total 1% 3% 14% 25% 100% 1% 0% 10% 13% 100% 1% 0% 9% 22% 100% 1% 3% 12% 18% 100% 1% 2% 11% 20% 100% 0% 1% 1% 20% 100% 0% 0% 0% 0% 100% 0% 0% 0% 2% 100% 0% 1% 1% 31% 100% 0% 1% 1% 26% 100% 0% 2% 3% 48% 100% 0% 0% 1% 60% 100% 1% 3% 5% 46% 100% 0% 1% 3% 56% 100% 1% 2% 4% 51% 100% 1% 2% 6% 34% 100%
NWDA: North West Ports Economic Trends & Land Use Study
Table 2.9 NW Ports – GB Hinterland SeaMode Bulk
Bulk Total Unaccomp trailer Unaccomp trailer Total Accomp HGV Accomp HGV Total Lolo
Lolo Total Rail
PORT ELLESMERE PORT HEYSHAM LIVERPOOL MANCHESTER RUNCORN SILLOTH WORKINGTON FLEETWOOD HEYSHAM LIVERPOOL FLEETWOOD HEYSHAM LIVERPOOL ELLESMERE PORT LIVERPOOL MANCHESTER WORKINGTON LIVERPOOL TRAFFORD PARK RFD
Rail Total Grand Total Source: MDS Transmodal GB Freight Model
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InlandRegion E Mids E of Eng Gtr Lon 66 842 932,503 358,191 1,139 1,291,899 108,393 69,876 668,712 846,981 29,634 9,154 289,351 328,139 250,022 23 250,045 483 259 742 2,717,806
973,947 49,350 1,833 151
39,676 17,648
1,026,123 130,076 413,380 1,269,334 1,812,789 67,528 24,565 695,490 787,583 161 124,520 1,233
57,325 19,553 48,671 191,688 259,912 10,777 2,969 129,469 143,214
125,914
18,843
3,752,409
479,294
NE
NW
403 27 191,719 29,391 734
18,694 149
222,273 321 66,610 10 66,940 399 19,193 5 19,596 627 135,759 345 136,731 714 29,011 29,725 475,265
9,198 35,094 4,561,142 1,820,989 68,760 3,614 269 6,499,066 210,873 577,713 531,613 1,320,199 161,093 73,303 246,647 481,043 30,149 1,641,360 5,428 132 1,677,070 252,040 118,332 370,371 10,347,749
Scotland SE SW Wales W Mids Y&H Grand Total 26 931 52 826 710 3,325 16,378 529 25 35,675 197,846 188,470 144,221 387,885 1,583,106 1,829,053 11,029,569 10,110 48,675 11,655 111,865 188,958 795,643 3,442,476 2,485 9,450 3,407 7,980 95,054 8,722 536 1,756 1,427 16,940 178 4,772 5,219 217,234 241,096 155,929 510,231 1,777,939 2,642,199 14,641,313 10 118,900 6,283 2,473 15,061 688,214 1,300,157 6,231 572,275 12,214 1,247 4,260 690,071 2,462,548 630,705 23,779 11,967 703,923 474,218 4,505,948 6,241 1,321,880 42,276 15,687 723,244 1,852,503 8,268,653 11 163,980 8,029 1,062 9,558 115,696 567,767 3,566 11,626 1,838 168 2,604 82,707 231,692 589,876 19,916 3,274 334,219 250,325 2,558,571 3,578 765,481 29,784 4,503 346,381 448,727 3,358,030 26 2,442 5,269 2,063 40,737 29,652 91,472 33,866 124,857 561,286 1,001,764 4,013,253 24 1,937 540 100 3,486 13,264 107 2,749 2,988 29,702 95,850 33,866 130,773 561,387 1,010,061 4,070,242 15,263 19,078 917 10,276 298,770 4,562 8,096 276 104,362 264,897 19,825 27,174 1,193 114,637 563,667 276,581 2,424,308 261,854 688,368 3,410,144 6,068,128 30,901,905
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Table 2.10 provides an analysis of the extent to which traffic with an origin or destination in the North West region is handled through the region’s own ports. The analysis excludes traffic that moves no distance inland. Table 2.10: North West ports’ share of the regional freight market, 2007 Million tonnes Mode
All NW Region Freight
Bulk Accompanied HGV Unaccompanied HGV LoLo Total Port traffic Rail Grand Total
Of which: NW Ports share Tonnes % 6.5 0.5 1.3 1.7 10.0 0.4 10.4
13.6 7.4 6.3 5.3 32.6 0.5 33.0
48% 7% 21% 32% 31% 81% 31%
Source: MDS Transmodal GB Freight Model
Table 2.10 emphasises the importance of the region’s ports in handling bulk traffics with an origin or destination in the North West, while the low percentage of accompanied RoRo traffic is due to the high proportion of that traffic that is routed through the Dover Straits. The analysis emphasises the extent to which, in the LoLo sector, the Port of Liverpool is competing with deep sea container ports in the Greater South East; in 2007 we estimate that the Port handled about one-third of the North West’s total containerised port traffic. North West port traffic development The development of port traffic through the North West’s ports since 1990 is presented in Figure 2.9. Figure 2.9: North West port traffic by port 1990-2007 Source: DfT Maritime Statistics
60,000
50,000
Silloth
Thousand tonnes
Workington 40,000
Whitehaven Barrow Heysham
30,000
Lancaster (Glasson) Fleetwood
20,000
Manchester Garston Liverpool
10,000
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20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
0
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Figure 2.9 shows that traffic through the North West ports during the period 1990-2007 has fluctuated, but with a gradual upwards trend at an average annual growth rate of 1.5% per annum, compared to 0.9% per annum for total GB port traffic. Figure 2.6 also shows how the ports of Liverpool and Heysham have driven long term growth in traffic in the region, with traffic at other regional ports remaining roughly stable or declining. This reflects two main long-term trends: • •
The concentration of traffic on deep sea ports that can offer economies of scale to shipping lines; Faster growth in unitised traffic as trade has been liberalised and the European and world economies have become more integrated.
Having considered overall trends for the North West ports, the analysis continues by considering trends for each broad category of port traffic. 2.6
Port markets: containers
Container port market size & NW ports’ market share Table 2.11 provides an analysis of UK container port growth between 2002 and 2007 and shows GB LoLo container port traffic (net of transhipment) grew by 36% from 3.7 million units to some 5.0 million units.
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Table 2.11: GB Container Port Traffic 2002-07 Thousand containers 2002
2003
2004
2005
2006
2007
% Growth 200207-
1,715
1,585
1,711
1,728
1,880
2,063
+20%
Southampton
791
846
880
838
903
1,110
+40%
Thamesport (Medway)
325
314
377
413
354
307
-6%
Tilbury (London)
374
397
506
451
446
493
+32%
3,205
3,142
3,474
3,430
3,583
3,973
+24%
309
356
378
383
385
418
+35%
3,514
3,498
3,852
3,813
3968
4,391
+25%
103
111
125
132
140
151
+47%
Hull
88
153
172
135
139
155
+76%
Goole
51
18
27
61
44
36
-29%
Greenock
33
45
36
36
37
43
+30%
Tees
74
82
82
84
81
94
+27%
Bristol
55
58
66
70
61
53
-4%
Immingham & Gr.
61
46
50
90
82
86
+41%
Other
183
173
222
152
148
165
-10%
Sub-total other GB container ports
648
686
780
760
732
783
+21%
Total GB container ports
4,162
4,184
4,632
4,573
4,700
5,174
+24%
MDST estimate of units transhipped
(508)
(343)
(305)
(280)
(235)
(207)
-59%
Net domestic GB LoLo containers
3,654
3,841
4,327
4,293
4,465
4,967
+36%
14%
9%
7%
6%
5%
4%
Felixstowe
Sub-total Greater SE deep sea container ports Liverpool Sub-total GB deep sea container ports Forth
Transhipment as % of domestic Source: DfT Maritime Statistics, with MDST estimates
The GB ports that handle calls from deep sea container ships are Felixstowe, Southampton, Thamesport, London and Liverpool, the latter port being the only one which is not located in the Greater South East. The data shows that in 2007 Liverpool was the fourth largest GB container port with 8.4% of the total GB domestic container market (net of transhipment), almost exactly the same market share as in 2002. However Liverpool has been able to grow its traffic volumes faster than the Greater South East deep sea container ports in aggregate (+35% rather than +24% for the Greater South East ports) and has achieved the highest growth of any deep sea container port apart from Southampton. Containers from deep sea markets, such as China, do not only enter or leave GB following calls by deep sea container ships because some containers that are bound for the UK are also transhipped in deep sea container ports such as Rotterdam and Antwerp; this is where a deep sea vessel unloads (say) containers for the UK containing imports from China and the containers are then re-loaded onto a smaller “feeder” vessel and transported to “feeder ports” around the coast of GB. Some of the east coast feeder ports, such as Forth, Hull and Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Immingham have achieved above average growth in container traffic during the period 200207; this is essentially due to the lack of capacity at South East deep sea container ports such as Felixstowe and Southampton, which has led to an increasing proportion of GB’s container traffic being transhipped at continental mainland ports. The lack of capacity at the SE deep sea container ports is also reflected in our estimate of the proportion of containers with a final destination in the rest of Europe that are transhipped in these GB ports and then fed to ports in the rest of Europe; we estimate that the proportion of containers transhipped in GB deep sea container ports has fallen from 14% of all containers handled in 2002 to only 4% in 2007. Nevertheless, Table 2.11 shows the continuing dominance of the GB deep sea container port market by ports in the Greater South East, with the ports of Felixstowe, Southampton, Tilbury (London) and Thamesport (Medway) handling some 77% of the GB container market. This reflects the continuing preference for most deep sea shipping lines to minimise maritime diversion costs by serving GB with a single call at a port in the South East en route between Gibraltar and Rotterdam. The growth in container traffic through GB ports matches the expansion in British imports of consumer and semi-manufactured goods. In recent years growth has been driven by globalisation of the world economy, as manufacturing capacity shifts towards the Far East and, in particular, China. For this reason the Far East-Europe and trans-Pacific trade routes have become the most important in the world in terms of volumes. Increasing ship size The growth in trade between the Far East (and China, in particular) and Europe and North America has led to deep sea shipping lines placing orders for a large number of vessels of over 10,000 TEU, largely for deployment on Europe-Far East and Far East-US routes. Larger ships allow the shipping lines to develop economies of scale, thereby reducing the average cost per container moved. The profile of newbuildings by TEU capacity in late 2008 is shown in Table 2.12 below. There are 185 vessels on order of 10,000 TEU or more, representing some 36% of all capacity on order.
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Table 2.12: Container ships on order, by TEU capacity, 2008 TEU capacity No. of ships % ships on order Thousand TEU 100-1199 183 14.5% 169 1200-1999 188 14.9% 302 2000-2999 111 8.8% 288 3000-3999 81 7.2% 308 4000-4999 256 20.3% 1,119 5000-5999 48 3.8% 257 6000-6999 66 5.2% 433 7000-7999 29 2.3% 213 8000-8999 84 6.6% 709 9000-9999 23 1.8% 220 10000-10999 25 2.0% 253 11000-11999 19 1.5% 215 12000-12999 55 4.4% 688 13000-13999 63 5.0% 830 14000+ 23 1.8% 322 Total 1,264 100% 6,325 Source: MDS Transmodal Containership Databank
% capacity on order 2.7% 4.8% 4.6% 4.9% 17.7% 4.1% 6.8% 3.4% 11.2% 3.5% 4.0% 3.4% 10.9% 13.1% 5.1% 100%
The increasing importance of these very large containerships at European ports will continue to lead to pressure to call at fewer deep sea ports in North West Europe, with other regions served by feeder services. In addition, the large size of the vessels means that any port that wants to accommodate them needs to have sufficient depth of water in the approach channel and alongside, with a sufficiently long berth and enough craneage to discharge and load the vessel reasonably efficiently to minimise the time on-berth. The deep sea container port sector in the Greater South East As explained above, some two-thirds of all containers with an origin or destination in the North West are handled by port outside the region, principally in the Greater South East. The competitive position of the ports on Harwich Haven, the Thames, Medway and the Solent therefore has a very significant impact on the position of the Port of Liverpool. In recent years the major deep sea container port operators have sought planning permission to develop additional capacity to handle the latest generation of vessels. While ABP’s application for Dibden Bay was rejected, Hutchison secured the relevant permissions for an extension to Felixstowe (called Felixstowe South) and for a major new development at Harwich (Bathside Bay); Dubai Ports World secured the required permissions for a large new deep sea container port on the Thames (London Gateway). Table 2.13 sets out the existing and planned capacity of deep sea container berths in the Greater South East.
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Table 2.13: Deep-sea container port capacity in the Greater South east in 2009, including planning permission for expansion Deep sea port/terminal
Felixstowe Southampton Container Terminal Thamesport Tilbury Container Services London Gateway Bathside Bay Felixstowe South Total Source: MDS Transmodal
Existing quay length (metres) 2,793 1,357 (+ 250m feeder berth) 650 590
5,640
Existing capacity (MTEU) 3.3 1.9 0.6 0.5
6.3
Future quay length (metres) 2,793 1,607 650 590 2,300 1,400 (net) 910 10,250
In addition, the Port of Bristol Company has submitted a planning application for the development of its Deep Sea Container Terminal project, which would provide two postpanamax berths outside the lock gates at Avonmouth. There are no objectors and so it appears likely that the development will receive the relevant permissions. The shipping trade press has reported that APM Terminals (the container terminal subsidiary of Maersk – the largest container shipping line in the world) is interested in jointly developing the facility with the Port of Bristol. Given the structure of the GB deep sea container port market, the two main operators in the Greater South East are likely to increase capacity only on a phased basis in the Greater South East, particularly given the financial crisis and the slowdown in deep sea container traffic growth. We do not believe there is a significant prospect of a major increase of capacity that will dramatically reduce the prospects of traffic growth for Liverpool. In addition, the development of the riverside berths at Liverpool (and Bristol) should help to increase competition by providing an alternative for the major deep sea shipping lines. The combination of trade growth and the tightness of capacity in the Greater South East deep sea container ports has led to increasing feedering of containers from Continental deep sea container ports such as Rotterdam and Antwerp to regional container ports in Northern Britain, such as Grangemouth, the Tees, Immingham, Hull and Greenock and Liverpool. Container traffic growth at the short sea/feeder ports shown in Table 2.11 reflects this trend. A container feedering strategy to serve Northern Britain is generally cheaper than distributing containers by rail from Greater South East ports, but leads to a longer transit time. Small container feeder vessels can be accommodated at the Port of Liverpool and at Irlam on the Ship Canal; subject to planning permission, they could also be handled at the Port Salford facility on the Ship Canal.
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Prospects for the Port of Liverpool The Europe-North America route, which is of particular importance to the Port of Liverpool, had been shielded from the need to cater for very large containerships because of the importance of the US east coast market and the limited draft available in East Coast North American ports. However, ports such as New York have now been dredged to accommodate 14.5m draft vessels over wide tidal windows and this provides the opportunity for the world’s largest ships to trade between the Far East and the East Coast of North America via the Mediterranean and NW Europe. The Panama Canal will be widened by 2014 and this will facilitate the use of post-panamax vessels on round the world services. As shipping lines generally continue to make a single call in GB and the British market may need to be served to “fill” the ships across the Atlantic on these round the world services, a west coast port is well-located to accommodate these calls on a reasonably direct route between Gibraltar and New York. Furthermore, Liverpool provides the most central location of any GB port for inland distribution by road and rail, thereby minimising inland distribution costs and is likely to be more cost-effective for a large shipping line than other west coast ports. In this context Peel Ports sought planning permission for a Riverside Container Terminal and received the relevant permissions in March 2007. Without this facility the Port of Liverpool would be much less likely to be able to attract deep sea services to take advantage of these opportunities. Another important trend is the increasing use by shipping lines of high cube (9 foot 6 inch high) containers. Network Rail, with private sector and Government funding has therefore developed W10-cleared direct routes to the WCML from both Felixstowe and Southampton and a W10 cleared route is already available from Tilbury to the WCML. The Bootle Branch Line has also now been cleared to W10 to allow the Port of Liverpool to distribute high cube boxes by rail to its hinterland. Market prospects The global container industry is increasingly dominated by a handful of lines and the end of shipping service cartels (so-called ‘conferences’) to and from the European Union in October 2008 will mean that these lines will be forced to engage in direct price competition which, combined with increased capacity in the market provided by larger ships and lower demand is leading to a rate war between Europe and the Far East. This means that further consolidation in the market is likely and the shipping lines are being forced to seek ways to reduce costs and maximise the quality of their service to retain customers.
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Port markets: roll-on roll-off (RoRo) freight
Market structure North West ports’ RoRo traffic is, for geographic reasons, essentially to and from Ireland. For the purposes of market analysis, the Irish Sea RoRo market has traditionally been divided into three distinct geographic corridors: • The Northern Corridor: routes between SW Scotland/NW England to Northern Ireland; • The Central Corridor: routes from North Wales/NW England to all of Ireland; • The Southern Corridor: routes between South Wales and the Republic of Ireland. In the RoRo freight market the services to and from North West ports, lying on the Central Corridor, are to a greater or lesser extent in competition with the other two corridors as well as with each other. The Loch Ryan routes have historically been the major routes between the whole of Great Britain and Ireland for accompanied freight because they used to be the only way shippers could distribute goods to Ireland overnight from England. The Southern Corridor routes serve a niche freight and passenger market between the southern counties of the Republic and Southern Britain, with a high proportion of Ireland-Continent land bridge traffic. Historic market size & growth Growth in the market has been significant during the last 15 years or so, driven particularly by strong economic growth in the Republic of Ireland, the “peace dividend” in Northern Ireland and greater integration of the EU economy. A substantial proportion of the freight growth to Ireland has been a result of British retailers’ expansion into Ireland, both north and south. Figure 2.10: GB-Ireland RoRo Freight Market 2002-07
Thousand units
Source: MDS Transmodal, b ased on DfT Maritime Statistics 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 -
Southern Corridor Central Corridor North Corridor
2002
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2004
2006
2007
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Figure 2.10 shows the development of traffic on each corridor between 2002 and 2007. During this period, the market grew from 1.40 million freight units to 1.77 million units at a compound average rate of 4.8% per annum, although growth in 2006-07 fell to 2.9%. The market fell in 2008 by approximately 3%. The Central Corridor and the Southern Corridor have won market share at the expense of the Northern Corridor. Market share for the Northern Corridor has fallen from 54.0% in 2002 to 48.6% in 2007, while the Central Corridor has increased its market share from 39.5% to 43.0% over the same period. The Central Corridor has continued to take market share from the Northern Corridor for the following reasons: •
•
•
Geographic advantages: the Central Corridor provides the most direct ferry links between the major UK centres of population and production and the largest Irish market (i.e. Dublin), while the Ports of Dublin, Liverpool and Holyhead provide deepwater facilities and can accommodate the largest ferries. Increasing road haulage costs have led some hauliers to seek to minimise the road distances by using services on the Central Corridor. New facilities and vessels: the Twelve Quays facility in Birkenhead, in particular, has provided the Mersey with riverside berths that allow the Central Corridor to target overnight accompanied truck traffic. Both the RoRo operators from Holyhead have increased ferry capacity to the Dublin Bay area. Diesel prices: the differential in diesel prices between the United Kingdom and the Republic has led to Northern Irish hauliers increasingly operating via Dublin to take advantage of cheaper fuel. This makes all the ROI routes more attractive at the expense of the routes from Belfast and Larne.
Essentially technical/operational improvements and the end of market distortions (such as poor industrial relations up to the 1990s in both Dublin and Liverpool) have allowed some of the Irish Sea RoRo freight traffic to return to the most direct routes to Ireland via the Central Corridor. Retail distribution to Ireland by major supermarket chains was traditionally undertaken from Scottish Regional Distribution Centres (RDCs), utilising services from SW Scotland because only these services, with their more frequent and shorter crossings, could guarantee overnight despatch and early morning deliveries to supermarkets. With services from Liverpool and Holyhead increasing in quality and frequency, many retailers have started to service their Irish retail outlets from North West RDCs. This means that RDC development may increasingly be attracted to NW ports to serve Ireland and NW England simultaneously. NW Ports market share Table 2.14 shows the size of the Irish Sea freight RoRo market in 2003 and 2007. The three NW RoRo ports of Liverpool, Fleetwood and Heysham had, collectively, 56.4% of the market in 2003 and 52.4% of the market in 2007; at the same time Holyhead has grown its market share from 15.5% to 19.1%. So, although the Central Corridor as a whole has won some
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market share from the Northern Corridor during the period 2003-07, Holyhead (with the significant increases in capacity by the operators) has been the main beneficiary. The NW RoRo ports had some 80.1% of the unaccompanied RoRo traffic in 2003 and 76.1% of the unaccompanied market in 2007. Despite this loss of market share in the unaccompanied market sector, the North West ports still provide the main routes to Ireland for slower-moving unaccompanied RoRo freight. Table 2.14: GB-Ireland RoRo market (“major ports” only) 2003 & 2007 Thousand units
Liverpool Heysham Fleetwood Sub-total NW ports Stranraer Cairnryan Holyhead Fishguard Milford Haven Total Irish Sea RoRo market
Accomp 113 27 41 181 99 126 190 25 34 655
2003 Unaccomp 279 297 84 660 18 67 41 11 27 824
Total 392 324 125 841 117 193 231 36 61 1,489
Accomp 171 25 41 237 99 164 274 36 52 862
2007 Unaccomp 357 224 106 687 17 76 63 17 43 903
Total 528 249 147 924 116 240 337 53 95 1,765
Source: DfT Maritime Statistics
Liverpool had a 26.3% share of the whole Irish Sea RoRo market in 2003 and 29.9% of the market in 2007, while Heysham had a 21.8% share in 2003 and 14.1% in 2007. Fleetwood has maintained its share at about 8.4%. Trends & prospects Key trends in the Irish Sea RoRo market in the last twelve months in terms of capacity offered have been: • The launch of more direct ferry services between the continental mainland and Ireland, so that hauliers have more options to avoid the landbridge across GB; these services have quite limited capacity and are likely to affect the Southern Corridor more directly than the NW RoRo ports. • Aggressive expansion of capacity planned by Seatruck, which is introducing two new ferries on the Heysham-Warrenpoint route and has a further six vessels on order although not all will be deployed on the Irish Sea. The other main operators from the North West have been more conservative in their approach, given the economic situation: P&O Ferries have made no changes, Norfolkline has reduced its capacity on the routes form Heysham. With both the Republic of Ireland and the UK in recession by early 2009, it is likely that traffic in 2009 will decline compared to 2008 and there was a decline in volumes in 2008 compared
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to 2007; the latest industry data for the Irish Sea market, which does not include results for both Norfolkline and Irish Ferries, suggests that the market grew by 1% in 2007-08 and fell about 3% in 2008 compared to the same period in 2007. The Dover Straits RoRo market provides an indication of the state of the RoRo market overall and both the Port of Dover and Eurotunnel have reported traffic volumes for the final quarter of 2008 – showing a fall of 18% compared to the same period in 2007. The number of HGVs passing through the Port of Dover in January 2009 fell a further 2.2% compared to the same period in the previous year. Overall, Dover traffic fell by 3% in 2008. In conclusion, the Irish Sea RoRo freight market has slowed in 2008 and may decline in 2009 as both the Irish and UK economies are in recession. The reduction in general economic activity, particularly in the retail and construction sectors, has led to a reduction in consumer demand, which has a direct impact on the volume of unitised freight moving across the Irish Sea. 2.8
RoRo Passengers
The Irish Sea RoRo passenger market is also split into the Northern, Central and Southern Corridors. However, passenger ferry services experience modal competition from low cost airlines in particular, with Ryanair dominating the market between GB and the ROI and EasyJet dominating the GB-Northern Ireland market. In 2002 the ferries had 29% of the market but this fell to only 22% in 2005 and 2006. However the GB-Ireland aviation market has become increasingly mature and by 2007 the ferries were beginning to recover some market share (Figure 2.11) by focusing on the convenience of being able to travel with your own car at a time when air travel was becoming a less attractive experience. Figure 2.11: GB-Ireland Passenger Market 2002-07 Source: MDS Transmodal, b ased on PSA/CAA data 25,000
Thousand passengers
20,000 Ferry - Southern Corridor 15,000
Ferry - Central Corridor Ferry - Northern Corridor Air - GB-ROI
10,000
Air - GB-Northern Ireland 5,000
0 2002
2003
2004
2005
2006
2007
However, the deep recession in the ROI and the gloomy economic prospects in the UK have reduced the propensity to travel in 2008 and the latest data from the Passenger Shipping Association for the whole of 2008, suggests that the total Irish Sea market for passengers Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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was down 6.9% compared to 2007, with the Central Corridor routes down some 6.7%. Car volumes were down 6.8% for the whole Irish Sea market and 7.0% for the Central Corridor. This downward trend is likely to continue into 2009 as the UK has joined the ROI in recession and sterling has weakened against the euro, reducing the attractiveness of the ROI as a tourist destination for UK residents. The impact of this downturn in passenger traffic is less significant for North West ports because they offer longer routes across the Irish Sea, which have always been less attractive to the passenger market than the short routes between the Loch Ryan ports and Northern Ireland and the routes from Holyhead to Dublin Bay. In 2008 NW ports handled some 101k cars out of a total of 1,155k cars, representing 8.8% of the total Irish Sea passenger car market; although the total number of passengers transported by routes to and from NW ports fell slightly in 2007-08, these routes increased their market share (only 8.2% in 2007). 2.9
Rail freight distribution parks
The North West is physically located some 320km north of London and the M4 Corridor and some 350-400km from the major container ports in the Greater South East. Because intermodal rail freight tends to be more competitive beyond 300km it is to be expected that rail freight will offer a competitive proposition from these ports and rail also offers the region a means of reducing its peripherality through reducing transport costs. The cost of using rail freight is further significantly reduced if the origin or destination of the goods is itself railside (i.e. directly connected to the rail network). The most straightforward means of achieving this is by locating warehouses at rail linked distribution parks. Warehouses are cheap relative to the transport costs involved in serving them. Consider, for example, the case where 25% of goods received at a North West RDC (Regional Distribution Centre) are sourced 300km distant; this would make the flows suitable for use of rail and would therefore benefit by around £100 per load by the warehouse being on a rail connected site. A building of 50,000m2 would receive around 300 loads per day. If 25% were by rail, and, therefore, £7,500 was saved per day (£2m per annum) then that would pay for the cost of a brand new building (typical warehouse build costs are £400 per m2). In those circumstances, given the environmental benefits that flow from modal switch from road to rail, there is a case for location on rail-linked sites. The challenge is in creating suitable sites because they only make sense if developed on a large scale - large enough to generate sufficient trains to a wide range of destinations. The development of rail linked distribution parks in the North West at 3MG (Widnes), Parkside (St Helens), Port Salford and elsewhere in the region should be considered positively because they reduce transport costs for shippers located in the North West and because the rail services reduce congestion and environmental impacts. The region already Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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accommodates 4.15 million m2 in 206 buildings of > 10,000 m2 each, more then any other region except the East Midlands. If a high proportion of those buildings were eventually replaced by warehouses on rail-linked sites, then the region should benefit. Rail-linked distribution parks increase competition from ports in other regions, especially if rail services from these ports are assisted by operating grant from the DfT. It has also to be questioned whether rail services from other ports to the North West require grant assistance for rail to be competitive. While rail routes from ports of under 300km probably do require grant assistance to be competitive (e.g. Felixstowe, Southampton or Liverpool to the Midlands) beyond that distance only domestic traffic for which road collection/delivery at both ends of the route may be required probably merit assistance. The success of the North West in attracting new rail-connected distribution facilities, funded by private sector investment, is evidenced by the DfT’s decision to provide no further capital grant funding for new rail freight facilities in the North West due to the degree of competition that already exists and the risk of public subsidy distorting the market. The ideal arrangement in the region is for sites to be both rail and water connected because it will facilitate modal transfer between road, rail and waterborne transport. If large warehouses were developed at the Port of Liverpool, the availability of rail (and water) linked warehousing would also support the competitive position of the Port; however, it may prove challenging to assemble a suitable site due to the shortage of existing unencumbered land. The different rail linked distribution developments already trading in the region (3MG, Knowsley and, by some definitions, Trafford Park) and those proposed (Parkside and Port Salford) would all improve the region’s transport cost competitiveness. All are located on routes with at least W9 loading gauge clearance (i.e. able to accommodate 9’6” containers on competitively designed wagons). As we have explained above, such rail freight distribution park developments should be considered positively. Rail and water linked sites could be expanded and promoted with access to W9 (or better) loading gauge at both Liverpool and Port Warrington, as well as at Port Salford. These sites could also support local port development. 2.10
Port markets: non-unitised freight
Introduction The non-unitised port traffics are usually classified according to their modes of appearance at the port as either: • • •
Liquid bulks (e.g. crude oil, petroleum products and liquefied chemicals) or; Dry bulks (e.g. coal, iron ore, fertilisers) or; Semi-bulks/general cargo (e.g. packaged steel or paper products, project cargo).
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Liquid bulk The handling of crude oil and petroleum products, including coastal shipping of oil products, is one of the major port markets in terms of traffic volume, albeit one exhibiting little or no growth, as Figure 2.12 shows. The decline in liquid bulk traffic volumes shown in Figure 2.12 is largely due to a decline in movements of crude oil, as North Sea oil production gradually falls and less oil is brought to the UK for re-export. As such the North West is less affected by the decline in North Sea production, as the main flow to the region is of crude oil to serve Stanlow oil refinery. The bulk liquid business remains heavily dependent on the provision of specialised facilities and investment in permanent structures, which cannot easily be moved. These are effectively “captive” traffics for the ports concerned. The principal regional traffic flow is of crude oil brought into the Tranmere Terminal at Birkenhead and in 2007 10.1 million tonnes of this commodity were imported through the facility. The oil is transported by pipeline the 15 miles to Shell’s Stanlow refinery, where finished products such as jet fuel, petrol, diesel, fuel oil, bunkers and other products are made. Stanlow is one of nine UK oil refineries and provides 13% of the country’s refinery capacity. Some of the refinery’s products are taken out by sea, but a large proportion is transferred by pipeline direct to customers throughout the UK. The volumes of petroleum products handled through ports at a national level are more stable than crude oil and reflect demand for the refinery products, primarily petroleum, DERV and aviation fuel that is distributed from the refineries to coastal tank farms and for export, rather than by pipeline inland or by road directly from the refineries to petrol stations. The main flows in the North West are from facilities on the Manchester Ship Canal (adjacent or close to Stanlow) and in 2007 amounted to some 4.7 million tonnes. As far as development of the main markets for crude oil and oil products is concerned, the overall market trend in the UK has been down in recent years, although volumes through Liverpool have remained steady. Prospects for Tranmere are expected to be in line with import volumes, i.e. steady but not spectacular. The considerable investment made by the Port of Liverpool at its Tranmere facilities and by Shell at Stanlow illustrates the long-term commitment that is required to this particular trade and represents a considerable barrier to entry for any potential competitor or new entrant to the trade in the North West. Overall liquid bulk traffic in the Mersey grew by 3% in 2008.
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Figure 2.12: UK major ports liquid bulk traffic 2002-07 Source: DfT Maritime Statistics 350,000
Thousand tonnes
300,000 250,000
Other liquid bulk products
200,000
Oil products
150,000
Crude oil Liquefied gas
100,000 50,000 0 2000 2001 2002 2003 2004 2005 2006 2007
Liquefied gas imports, in the form of liquefied natural gas (LNG) have been expected to increase as the UK’s gas production in the North Sea declines and the UK seeks to avoid over dependence on Russian gas. However, LNG imports require specialised port reception facilities and there have been no proposals to develop such facilities in North West England. “Other liquid bulk” traffics covers a wide variety of different commodities, the most important of which in terms of volumes are chemicals. The key component of the chemicals trade is organic chemicals, followed by plastics in primary form, and the UK’s trade in plastics is fairly balanced. At a national level the trade in organic chemicals has grown at an average rate of 3% per annum since 1997 and trade is heavily oriented to the EU short sea market with Britain’s principal trading partners being Netherlands, France and Germany. Continued steady growth in the chemicals industry is anticipated over the long term, although growth may be tempered in the short term as a result of the anticipated global economic slowdown. The chemicals industry is an important economic cluster in the North West Region and ports on the Mersey in particular play an important role in this trade, as the third most significant port complex in the country in this market behind the Tees and the Humber. Ineos have invested £350m in new chemical plant at Runcorn, which should lead to additional export volumes. In 2007 the leading North West for these traffics was the Manchester Ship Canal, which handled some 1.6 million tonnes of mainly chemical traffic, while Liverpool handled some 0.5 million tonnes of imports. Dry bulks Figure 2.13 shows the trends in broad traffic types for dry bulk cargoes for the UK during the period 2000-07. The sector includes a diverse range of products, including coal, scrap metal, cereals and animal feedstuffs, ores and minerals and bulk dry chemicals. “Other dry bulks” mainly relates to aggregates and scrap metal. Dry bulk materials tend to be high volume, slow moving products and ideally suited to longer sea transits that bring commodities closer Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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to the point of consumption to lower inland distribution costs. Such products require large storage areas or facilities such as temperature-controlled sheds and warehousing located at the port. Figure 2.13: UK major ports dry bulk traffic 2000-07 Source: DfT Maritime Statistics 140,000
Thousand tonnes
120,000 100,000
Other dry bulk
80,000
Agricultural products
60,000
Coal Ores
40,000 20,000 0 2000 2001 2002 2003 2004 2005 2006 2007
The major fluctuations in dry bulk traffics have been in coal, due principally to changes in the demand for imported steam coal used in power generation as its cost for electricity generation has fluctuated against the cost of generation by burning gas. In the North West it is the steam coal imports that feature as a major component of port traffic at Liverpool and is specifically related to the Gladstone Dock coal terminal. This was built in the 1990s to provide an import facility for coal, especially for the Fiddlers Ferry facility near Widnes. In 2007 Liverpool handled some 2.0 million tonnes of coal, down from 3.0 million tonnes in 2003, which demonstrates the inherent fluctuations in the market. However, Fiddlers Ferry has fitted flue-gas desulphurisation equipment (FGD), which under EU legislation secures its life at least for the medium term. The major sources of imported steam coal are Australia, South Africa and South America and the trade utilises the very largest bulk carriers in seaborne trade. In the North West only Liverpool offers sufficient depth required by Panamax bulk carriers (50-80,000 dwt), but the port is unable to accommodate the largest Capesize bulkers (100-150,000 dwt), which leaves the port open to competition from rail linked deep water ports such the Humber International terminal (HIT) at Immingham and Portbury Dock at Bristol. However, with the completion of the Olive Mount Chord coal is now being distributed from Liverpool by rail to the Midlands power stations i.e. into the hinterland served by both Immingham and Bristol. The port of Liverpool plays a significant role at a national level in the export of ferrous scrap, which has been a growth sector due to continuing expansion of global consumption and a decline in domestic demand for scrap as an industrial raw material. In 1997, the UK imported 2.1m tonnes of scrap and exported 3.6m tonnes, while by 2006 imports were only 0.2m tonnes and exports were 7.4m tonnes. Liverpool was responsible for 30% of those UK exports. Given the low value of this homogenous product and the extreme importance of Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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transport costs, Liverpool’s great success in this sector demonstrates the advantages the combination of deep water and inland market accessibility provide to the market. The agricultural products market, including cereals and animal feedstuffs (AFS), is important for several of the North West’s ports with their agricultural hinterlands. The total UK market was 12.7 million tonnes in 2007. In 2007 Liverpool (including Garston) handled 2.7 million tonnes of agricultural products, giving the port a 24% market share, while the Manchester Ship Canal handed a further 0.2 million tonnes. The Port of Liverpool has made major investments at Seaforth, backed by long-term contracts with customers, for handling these products. Animal feedstuffs are also imported into smaller ports in the North West to serve subregional agricultural hinterlands, but Liverpool benefits from the economies of using larger ships. There is a long-term decline in feedstuff imports, which can be expected to continue. However, the same or similar materials can also be used as biomass in power stations, which may be a growth market for the future for North West ports. Semi-bulk/general cargo Figure 2.14 shows the trends in broad traffic types for general cargo or semi-bulk commodities at a UK level during the period 2000-07. The sector includes packaged steel, packaged timber and paper products, project cargo and import/export vehicles.
Figure 2.14: UK other general cargo 2000-07 Source: DfT Maritime Statistics
Thousand tonnes
60,000 50,000
All other general cargo traffic
40,000
General cargo & containers <20'
30,000
Iron and steel products
20,000 Forestry products 10,000 0 2000 2001 2002 2003 2004 2005 2006 2007
The sector is very varied in terms of commodities and the North West has a lower market share in many of these trades. Forestry products traffics are dominated by imports through east coast ports, as the products mainly come from Scandinavia and the Baltic and North America has declined as a UK source of forest products.
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The UK trades extensively in steel products, but packaged steel exports are from ports close to the major steel plants in South Wales, the Humber and Middlesbrough and the majority of steel imports are sourced from the Near Continent. The development of the steel industry in both India and China, with a lower cost base, may provide opportunities in the future for Liverpool in particular, with its deep water facilities, and this may be reflected in the port’s steel traffic volumes which were 0.9 million tonnes of imports in 2007 compared to only 0.04 million tonnes in 2003. Steel imports have since declined as the construction and car industries have gone into recession but it can be expected to recover in the medium term. Despite being home to major car plants at Halewood (Jaguar/Land Rover) and Ellesmere Port (Vauxhall/Opel), Liverpool handles only around 1% of all British port trade car traffic. The principal requirement for an import port is extensive land for parking - around 4m2 of parking area is required for every car handled per annum, assuming a 2 month mean dwell time. Export traffic is parked more closely and moves much more rapidly - only around 0.4m2 of parking area is required per car exported per annum. However, limited land is available for this kind of traffic at ports in the North West. Currently, Opel cars for export produced at Ellesmere Port are delivered by road to Purfleet. Jaguar and Land Rover vehicles produced at Halewood are transported by rail to Southampton and a significant proportion of these vehicles are destined for North American markets. Mersey Ports have not played a significant role in the import of fruit and vegetables for many years. However, the growth in imports from many ports of the Atlantic basin (Iberia, Central America and the Caribbean) provides an opportunity for traffic growth through Liverpool and construction of the Produce Terminal at Seaforth should allow Liverpool’s to increase its share of the fresh produce market. The development of offshore gas fields and wind farms off he coast of North West England have allowed ports such as Barrow, Workington and Heysham to act as shore bases, particularly in the long-term for maintenance activity. 2.11
Port markets: cruise
The UK cruise market (defined as UK residents buying cruise holidays) is the largest in Europe and has been growing rapidly in the last few years, due to increasing disposable income and the industry’s success in attracting younger passengers to the cruise experience. From the point of view of the cruise operator, the UK market can be split between the fly cruise market (where the passengers fly, for example, to the Mediterranean to join their ship) and the UK port market sector, where the passengers join their ship at a UK port. The increase in the size of the market is reflected in the number of UK resident passengers taking cruise holidays, as shown in Figure 2.15. Between 1997 and 2007, the total number of cruises taken by UK residents increased on average by 6% per annum. The fly cruise market sector, while remaining the more important in terms of numbers of passengers, has
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increased more slowly than the UK port sector: in 1997 2.7 fly cruises were taken for every UK port cruise, while in 2007 the ratio had fallen to only 1.9.
Figure 2.15: UK residents taking cruise holidays 1997-2007 Source: Passenger Shipping Association 1600
Thousand pax
1400 1200 1000
Fly cruises
800
UK port cruises
600 400 200 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Figure 2.16 shows the total number of passengers (whether resident in the UK or overseas, with passengers starting and ending their cruise in the UK counted twice) starting and/or ending their cruises at a UK port during the period 1999 to 2007. Once again, the statistics show substantial average annual growth of 11.5% per annum during the eight-year period. By 2006-07 market growth had slowed to 5.0%, which may reflect a market that is finally showing signs of maturity.
Figure 2.16: Passengers starting/ending cruises at UK ports 1999-2007 Source: DfT Maritime Statistics 1200
Thousand pax
1000 800 600
Pax starting/ending cruises at UK ports
400 200 0 1999
2000
2001
2002
2003
2004
2005
2006
2007
Ports receive one or both of two types of call by cruise vessels: turnaround calls are where passengers begin or end their cruises, while way-calls are where cruise vessels berth at a port for a day so that passengers can disembark to visit on-shore attractions. The major homeports for cruises are deepwater ports located close to the largest concentration of Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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population in the UK (i.e. London and the South East), with good road access to the major hub airports and direct maritime access to the Mediterranean, the Atlantic and the Baltic. As Table 2.15 shows, these homeports are Southampton, Dover and Harwich, which collectively handled about 94% of all passengers of all nationalities starting or ending cruises in the UK in 2007. Table 2.15: Passengers of all nationalities starting/ending cruises at UK ports, 2007 Thousand passengers Port Thousand passengers Southampton 716 Dover 175 Harwich 104 Other 69 Total 1,064 Source: DfT Maritime Statistics, 2007
While Liverpool attracts some home port calls, ports in the North West are mainly seeking to attract way-calls from cruise vessels that are cruising around the British Isles, on itineraries that include Ireland and Scotland as well as the North West. In order to attract calls, the region needs to offer visitor attractions (e.g. Liverpool and the Beatles and the Lake District) and provide port facilities at a reasonable cost for cruise operators. Cruise operators require alongside facilities for homeport calls and prefer them for way-calls, so that cruise passengers do not have to be tendered between the ship and the quayside. From a commercial point of view, UK port operators are generally not prepared to develop new specialised facilities for cruise ships because only a few calls can be attracted each year and the season only lasts between May and October. From an economic point of view, cruise passengers have been perceived by the public sector as providing wider economic benefits through their expenditure when making on-shore excursions. In the last few years, the most significant event in the cruise sector in the North West has been the development of the Liverpool Cruise Terminal at a cost of some £19 million. This facility, which opened in September 2007, can accommodate the largest cruise ships in the world alongside, is marketed by Liverpool City Council and was funded almost exclusively by the public sector. In 2008 the facility attracted 15 cruise ships and 14 ships are booked for the 2009 season. In addition, Barrow has marketed itself as the “Gateway to the Lakes” and has attracted a few calls from cruise ships in the last few years and Gladstone Dock (owned and operated by Peel ports) is used for turnaround ports. Anecdotal evidence suggests that cruise operators, who have invested heavily in new ships, are struggling to fill berths on their cruises since the Autumn of 2008. For example, Royal Caribbean reported to the markets at the end of January 2009 that, the demand environment “has remained weak over the last few months, although booking volumes have been successfully stimulated through aggressive pricing actions;” the fourth quarter of 2008 was “an extremely difficult operating environment and we expect even more challenges in 2009.”
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Another American cruise operator, Carnival, managed to increases its revenues in the fourth quarter of 2008, but has told analysts that, “2009 is expected to be a challenging year in the travel industry.” 2.12
Conclusion
Economic downturn Since the summer of 2008 the UK economy has deteriorated quite rapidly and is technically in recession and there is also a recession in the Republic of Ireland. The OECD believes that the UK, Ireland and the rest of the Eurozone and the United States will be in recession in 2009, while China’s GDP growth rate is expected to slow from almost 12% in 2006 to 8% in 2009. China’s containerized trade continued to grow up to the 3rd quarter of 2008, but then fell by 11% in the 4th quarter; it is likely to continue to fall in the short term. Historically, economic downturns have led to temporary reductions in traffic volumes, followed by quite rapid recoveries. The OECD’s projections suggest that economic growth is most likely to start to rebound in 2010, but it admits there is considerable uncertainty and that the, “distribution of risk around the projection is wide.” Much of the evidence is anecdotal because of the inevitable delay in publishing official traffic statistics but the downturn in the real economy in Western Europe and the United States has led to a reduction in the demand for consumer goods and is therefore likely to be having a significant impact on deep sea container and short sea RoRo traffic volumes passing through ports in North West England. North West ports In 2007 the North West’s ports handled some 47 million tonnes of freight, of which some 17 million tonnes (37%) were unitised. Since 2003 total traffic through NW ports has increased by 4.8%, while unitised traffic has risen by some 15.8% demonstrating the relative dynamism of the unitised traffic sectors. Liverpool (ranked 7th in the UK in terms of overall tonnage), Heysham (ranked 26th) and the Manchester Ship Canal (ranked 19th) account for 28.7m tonnes of non-oil traffic, which represents 8.6% of the UK total for ports of over 1m tonnes annual throughput. The smaller ports of Fleetwood, Garston, Lancaster, Barrow, Workington and Silloth account for a further 3.0m tonnes of cargo together, with Fleetwood alone contributing 1.8m tonnes. East coast ports play a very important ‘super-regional’ role in providing access for general cargo for all of Northern England and parts of the Midlands to the Northern Continent, Scandinavia and the Baltic; these ports also serve a number of heavy industrial plants that play a major role in Northern England’s economy. By contrast, ports in the North West tend to play a national role for particular forelands (North America and Ireland), rather than a mainly ‘super regional’ role; North West ports serve only one refinery and no steel works, whereas Northern England’s east coast ports serve three refineries and two steel plants.
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Containers UK container port traffic between 2002 and 2007 (net of transhipment) grew by 36% from 3.7 million units to some 5.0 million units. Liverpool was the fourth largest GB container port in 2007 with 8.4% of the total GB domestic container market and the port has been able to grow its traffic volumes faster than the Greater South East deep sea container ports in aggregate (+36% rather than +24% for the Greater South East ports) and has achieved the second highest growth of any deep sea container port apart from Southampton. However, 77% of all container traffic is handled through the deep sea ports in the Greater South East and these ports have become increasingly capacity-constrained. The two major port groups of Hutchison and DP World have an effective duopoly and, although they have secured planning permissions to develop a considerable amount of new capacity, it is only in their interests to expand capacity on a phased basis. The Port of Liverpool has also secured planning permissions for new post-panamax deep sea berths, which will accommodate the latest generation of ships and will allow the port to take advantage of any changes in strategy by shipping lines using a GB west coast port on a direct route to North America without a call in the English Channel or North Sea. The port has also secured access by rail at W10 loading gauge to the WCML, which will allow it to fully exploit its position as the most centrally located of all GB deep sea container ports. RoRo freight Between 2002 and 2007 the Irish Sea RoRo freight market grew from 1.40 million freight units to 1.77 million units at a compound average rate of 4.8% per annum, although growth in 2006-07 fell to 2.9%. The market declined in 2008 by 3%. The Central Corridor (routes to/from the NW RoRo ports and Holyhead) and the Southern Corridor have won market share at the expense of the Northern Corridor, which has been the traditional route for accompanied RoRo freight. Market share for the Northern Corridor has fallen from 54.0% in 2002 to 48.6% in 2007, while the Central Corridor has increased its market share from 39.5% to 43.0% over the same period. The three NW RoRo ports of Liverpool, Fleetwood and Heysham had, collectively, 56.4% of the market in 2003 and 52.4% of the market in 2007; at the same time Holyhead has grown its market share from 15.5% to 19.1%. So, although the Central Corridor as a whole has won some market share from the Northern Corridor during the period 2003-07, Holyhead (with the significant increases in capacity by the operators) has been the main beneficiary. The NW RoRo ports had some 80.1% of the unaccompanied RoRo traffic in 2003 and 76.1% of the unaccompanied market in 2007. Despite this small loss of market share in the unaccompanied market sector, the North West ports still provide the main routes to Ireland for slower-moving unaccompanied RoRo freight. The Irish Sea RoRo freight market slowed in 2008 and may decline in 2009 as both the Irish and UK economies are in recession. The reduction in general economic activity, particularly Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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in the retail and construction sectors, has led to a reduction in consumer demand, which has a direct impact on the volume of unitised freight moving across the Irish Sea. Rail freight distribution parks Due to the economics of rail freight transport compared to road and the distance of the North West from major sources of traffic such as the Greater South East deep sea container ports, rail freight distribution parks in the region can reduce transport costs (and reduce peripherality), while also helping to reduce the congestion and environmental impacts of road freight transport. The development of rail linked distribution parks in the North West at 3MG (Widnes), Parkside (St Helens), Port Salford and elsewhere in the region should therefore be considered positively. The ideal arrangement in the region is for sites to be both rail and water connected because the most competitive location would be around Seaforth, which would provide the competitive advantage of offering rail-based distribution with immediate access to deep-sea container services. In that way, the location of rail (and water) linked warehousing would also support the competitive position of the Port. However, it may prove challenging to assemble a suitable site due to the shortage of existing unencumbered land.
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POLICY ANALYSIS
3.1
Introduction
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This chapter provides a summary of key relevant policy documents at a UK and regional level and analyses how these policies might affect ports in the North West in the future. It also includes a discussion of changes to the system of business rates for ports and its potential impact on port-based businesses in the North West. 3.2
European policy
European transport policy for freight seeks to promote what the European Commission calls “co-modality” where the most effective mode is used, taking into account all costs including externalities. The Commission therefore continues to support schemes that promote modal shift away from road freight transport, where these are justified by net externalities. Through the Marco Polo and Transport Trans-European Network (TEN-T) Programmes the Commission provides funding towards services and infrastructure that leads to modal shift. Port infrastructure can be part-funded through the TEN-T, although any funding requires the support of the Member State. Both these schemes are used to fund “Motorways of the Sea” projects, which seek to shift road freight to broad maritime corridors and are partly a reflection of the perceived slow progress in developing rail freight services on the Continental mainland. The North West of England is located on the Motorway of the Sea of Western Europe, which links NW Europe to Iberia. European ports policy has generally been tolerant of public sector funding being provided for port infrastructure, which is at odds with the UK policy. In 2007 the Commission published a Communication on a European Ports Policy, which recognised that there may not be a “level playing field” between ports, despite the extent to which they compete with each other across national boundaries. The Communication stated that the Commission would adopt guidelines on state aid in ports in 2008, but so far these guidelines have not been published. Port services (i.e. stevedoring, tug services etc.) within ports is the only freight transport sector that has not been liberalised and the European Commission has tried on two occasions to introduce legislation that would open up the market for port services to greater competition; however, on both occasions it was defeated by an alliance of trade unions and port owners/authorities, including the UK’s mainly privatised ports which feared a loss of control over their privately owned assets.
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UK policy
UK transport policy The Future of Transport White Paper The last statement of official transport policy by the UK Government was in July 2004 in The Future of Transport White Paper, which set out the free movement of goods and people as being a key goal of Government policy: “We want to contribute to regional and national prosperity by facilitating the free movement of people and goods in and out of the country by air or sea. This will mean maximising the benefits of growth in aviation and shipping while responding to the challenges that this presents. Our starting point is to make best use of our existing airports and ports capacity. Where new capacity is needed we will aim to minimise the effects on the communities around our major airports and ports and on the environment” (paragraph 7.8). The 2004 White Paper did not favour any particular mode of transport, but argued that Government policies “should not be guided by attachment to particular forms of transport, but by the approach that offers the best value for money to deliver the best outcomes for our economy, society and the environment”. The major initiative relevant to freight and ports contained in the 2004 White Paper was the recognition that some form of road pricing might be required at some point in the future to ease road congestion. The Eddington Report on Transport and the Economy Sir Rod Eddington was jointly commissioned by the Chancellor of the Exchequer and the Secretary of State for Transport to examine the long-term links between transport and the UK’s economic productivity, growth and stability, within the context of the Government’s broader commitment to sustainable development. The Study was announced in Budget 2005 and accompanied the 2006 Pre-Budget Report. Highlighted in the report is the significance of the UK’s transport networks to enabling sustained economic productivity and competitiveness; the study links the performance of transport systems and corridors to the productivity of urban areas, supporting deep and productive labour markets, and allowing businesses to benefit from agglomeration. The study acknowledges the necessity of investment in new infrastructure, but details alternative options which can be explored, including pricing, regulation and traffic management, encouragement of smarter travel choices, travel planning and development of new technologies. Although Eddington is clear that transport capacity will have to increase, the study does not necessarily advocate massive expansion of road networks. The study supports development of a transport policy that ensures the UK’s transport system reflects all of the key elements of sustainable development.
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Given the importance of international gateways for the economic performance of the country and their increasing congestion and unreliability, Eddington recommended maintaining or improving the performance of the UK’s key international gateways, specifically deep sea and feeder container ports and RoRo ports that support a high level of business or freight usage. This applied to both the ports themselves and their surface access routes, where they are showing signs of congestion and unreliability. Paragraph 1.127 states, “Adding deep sea container port capacity in line with projected demands could reduce international delivery costs by up to £140 million per annum up to 2030, with additional feeder costs also likely to deliver significant benefits. Expanding roll-on roll-off capacity, particularly in the South East, would also offer economic benefits.” Eddington was particularly positive about the potential economic benefits of removing bottlenecks on surface access routes to ports. Eddington asserts that surface access projects should be relatively low in cost whilst simultaneously delivering a high cost-benefit ratio and substantial GDP benefits. The implication is that providing surface access to ports is one of the best areas for Government to focus its transport investment on. In articulating the importance of this measure, the report makes a demand for a Government reassessment of its policy on seeking private contributions toward new or improved rail and road connections. The Stern Review of the Economics of Climate Change In October 2006, Sir Nicholas Stern published his review of the Economics of Climate Change, the most comprehensive and widely recognised review ever released on this topic. The first half of the review focuses on the impacts and risks expected to arise as a result of uninhibited climate change, along with a discussion of the costs and opportunities associated with action on adapting to or mitigating for these climatic variations. The second half examines the national and international policy challenges of transition to a low carbon economy in the context of scientific and economic uncertainty. The review effectively asserts the severity of the economic risks of inaction in the face of climate change and estimates the cost of mitigation at around 1% of GDP; a small outlay relative to the costs and risks of climate change that will be avoided in the short and longer term. The Stern Review identified three key elements of an appropriate mitigation policy response: •
• •
Pricing carbon through trading, tax or regulation – ensuring that emissions reductions are delivered in the most cost-effective way to reflect the marginal damage caused by emissions which rises over time; Encouraging research, development, demonstration and deployment to bring forward a range of low carbon technologies; and Measures to encourage long-term behavioural change and overcome barriers, particularly on energy efficiency where there may be remaining market failures in the move to a low carbon economy.
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Many of the Government’s current actions in new climate change legislation, regulation and other policy measures are built on the conclusions from the Stern Review. The Department for Transport: The Changing Climate: its impact on the DfT This study details the main climatic changes, which will impact on ports and shipping, including rising sea levels, storminess, and wave changes. Other major likely impacts on ports are floods, damage to infrastructure and assets, disruption to operations and, because of its commercial basis, insurance claims. Impact on new ports development from climate change must ensure it compensates in kind for habitat loss, and in particular, the zone between low and high tide, which is often rich in biodiversity. Rising sea levels mean that this zone is reduced in areas where there are sea walls. The report highlights the need for ports to collaborate with Defra, DfT and the Environment Agency to provide for new habitats. The DfT has issued guidance on the preparation of Port Master Plans for co-ordinating medium to long-term planning. A plan should describe how, up to the planning horizon, the port intends to contribute to efforts to tackle airborne emissions hazardous to human and other forms of life. Within this guidance, the concept of cold-ironing (the provision and use of shoreside electricity supply to replace ships'generators) is hailed as having the potential to produce environmental gains, particularly where emissions from ships are contributing significantly to local air quality problems. The Ports Policy Review Interim Report (2007) stated its future expectation for newly developed terminals to make advance provision for cold-ironing facilities as well as for major ports to formulate plans for introducing such facilities at existing terminals, where appropriate, once a standard and its economic feasibility has been agreed. Delivering a Sustainable Transport System A paper entitled Towards a Sustainable Transport System was published in October 2007 as the Department’s response to both the Eddington Report on Transport and the Economy and the Stern Review of the Economics of Climate Change. It provided the basis for a consultation process that will lead to a new transport White Paper, which is likely to include a long-term transport strategy for the UK. In November 2008 Government published the report Delivering a Sustainable Transport System (DaSTS). This restates Government’s five broad goals for transport policy. •
•
Maximising the competitiveness and productivity of the economy: Policy should focus on improving predictable end-to-end journey times for both passengers and freight and Eddington suggested this could be achieved by making the best use of existing networks, ensuring that transport pricing is set at the right level, by targeted new infrastructure investment for all types of infrastructure. Addressing climate change by establishing a price for carbon, developing and using carbon technologies and removing barriers that prevent people from making informed decisions about their use of carbon.
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Protecting people’s safety, security and health Improving quality of life Promoting greater equality of opportunity.
The DfT has avoided prioritising these goals, but greater emphasis is placed on maximising the competitiveness and productivity of the economy and addressing climate change. Addressing both goals is identified as the biggest challenge facing transport policymakers. DaSTS continues the development of a national and policy and investment framework with which delivery partners (including local and regional authorities) can operate. This national framework is also to help local government, the transport industry and the business sector generally to develop their wider plans, both by setting out broad principles (e.g. on emissions). The framework also sets out key priorities for the development of national transport infrastructure. The document explained that the DfT’s investment plans to 2014 will focus on the most congested and crowded routes, around the most congested cities, whilst also addressing the most important capacity constraints on inter-urban and international gateways. At the same time, the government will be setting targets to cut carbon emission by 26-32% by 2020 and by 60% by 2050. The DfT will therefore have to identify robust emissions reduction “pathways” for transport; it is not yet clear how the Government intends to achieve these reductions in emissions. The DfT has identified a number of transport infrastructure components that are critical to the functioning of the system as a whole and to the economic success of the nation. These are: •
The ten ports (including Liverpool) and seven airports (which together make up the key international gateways) through which most people and goods enter and leave England;
•
The ten biggest conurbations in England, and
•
The 14 national transport corridors that connect them and other areas with strong economic growth and inward investment with each other and with the principal freight distribution centres.
Where Government’s proposed approach involves development of national transport infrastructure, it intends that the proposed Infrastructure Planning Commission will take key planning decisions, supported by the production of National Planning Statements (NPS) for the relevant sectors. An NPS on Ports is expected to be completed by the end of 2009. Most international gateways (ports and airports) are in private ownership, and are operated and used by private sector companies. Government intends to provide a clear framework within which these companies can operate.
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Government is also committed to improving the surface access to ports and airports (reducing journey times and improving reliability) and has a direct delivery role as a partfunder of schemes to improve the national network. A number of important schemes are identified in the North West’s Regional Funding Advice (see Section 3.4 below). The emerging response from the shipping and ports industry Emissions from shipping are not covered by the Kyoto Protocol and the shipping industry is currently excluded from the EU’s proposed Emissions Trading Scheme (ETS). Nevertheless since the publication of the Stern Report there has been an increased focus on the environmental impact of the shipping industry, both in terms of its global and local effects. EC policy is to bring the shipping industry within the coverage of the ETS. Global shipping is thought to produce 600-800m tonnes of CO2 (circa 5% of total emissions, more than double those from aviation). Without action emissions will increase sharply over the next 20 years in line with the rapid projected growth in global shipping. The merchant shipping industry’s fleet is largely powered with low-grade fuel, resulting in high emissions of black carbon (soot), which is thought to be the second most potent greenhouse aerosol after CO2. It raises global temperature by absorbing heat in the atmosphere (which would otherwise be lost through radiation) and by lowering the planet’s albedo (or reflectivity) and therefore increasing heat absorption. It is produced by a wide range of industrial processes, vehicle emissions and naturally through, for example, forest fires. The shipping industry is thought to account for circa 1.7% of global black carbon emissions. Unlike CO2 (which stays in the atmosphere for more than 100 years), black carbon remains in the atmosphere for a matter of weeks. As a result, there is increased focus on reducing black carbon emissions as one of the quicker wins that can be achieved to mitigate climate change and the shipping industry is likely to be at the forefront of these efforts, particularly in light of the projected long-term growth in traffic volumes. The International Maritime Organisation is continuing to encourage the use of higher grade, cleaner fuels and some port authorities are also pushing for the implementation of a range of measures following the adoption of the World Port Climate Change Declaration at the World Ports Climate Conference in 2008. Many of the actions required will need to be taken beyond port estates, in the design, commissioning and operation of the world’s shipping fleet - and it will be important to ensure that ships under the flags of all countries are covered by these changes, since 75% of the world’s fleet is under the flags of countries in the developing world. These measures include burning cleaner fuels, including renewables, speed reductions and increased fuel efficiency, better fleet maintenance and design and technology solutions, such as improving the efficiency of propeller design.
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However, there will also be steps that can be taken in ports, and, in the medium to longer term, there are likely to be increased political and commercial pressures to respond to these opportunities. The World Port Climate Change Declaration was signed in 2008 by 55 ports globally (led by the International Association of Ports and Harbours). It commits signatories to: • • •
Develop and adopt a standard methodology for the establishing the carbon footprint of ports Work towards the establishment of a Global Indexing System to incentivise change in the shipping industry (e.g. higher charges for the most polluting vessels) Explore and work towards the establishment of an Emissions Trading Scheme (with the industry preferring a global rather than a regional (European) scheme
• Looking further words the Declaration also commits signatories to adopt or further explore: •
• • •
Cold-ironing (or Alternative Maritime Power): increasing the number of power points for providing ships with electricity when docked (rather than burning fuel to generate electricity), the primary benefit being improved local air quality; Vessel Tracking Systems to reduce port congestion Promoting modal shift to rail, inland waterways and coastal shipping for inland distribution. Promotion of an accelerated shift towards hybrid and ultimately renewable energy powered vehicles within ports and for inland distribution by road.
Freight grants The Department for Transport has established a Sustainable Distribution Fund, which is available to provide both capital and/or operating grants to schemes that lead to modal shift from road to rail or waterborne transport. The individual schemes are: •
•
Freight Facilities Grant for both rail and waterborne capital investment schemes that would lead to modal shift from road; the DfT decided in 2008 that, due to potential distortions of competition, no grants would be available for intermodal rail terminals in the North West; Rail Environmental Benefit Procurement Scheme (REPS) (now being replaced by the Mode Shift Revenue Support Scheme that operates almost identically) and Waterborne Freight Grant to provide operating subsidies to services that would lead to modal shift from road.
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All of these schemes are available to support the development of facilities at, and services to/from, ports in the North West that lead to modal shift; however intermodal rail freight terminals at ports in the North West are unlikely to be supported through the FFG schemes. 3.4
UK ports policy
Introduction The Ports Policy Review Interim Report, published in July 2007, sets out DfT ports policy apart from policy on inland connections; the latter is being drawn up in parallel with the Department’s full response to the Eddington and Stern Reports. The Interim Report focuses on general conclusions about the future direction of ports policy for England and Wales. Forecasts Forecasts produced for the DfT and published in the Ports Policy Review Interim Report have suggested that long-term growth in LoLo freight traffic (in tonnes) to and from GB is likely to be 3.5% per annum up to 2030. Furthermore the DfT states that, “in the absence of new development or large efficiency improvements over the coming decade, constraints would be in: • • •
Deep sea container terminals in the Greater South East, closest to the major shipping routes; Feeder capacity (both berths and short sea shipping services) around the country for movements via hub ports and elsewhere; and Roll-on roll-off terminal capacity in the South East, serving short-sea routes to the Continent” (paragraph 8).
The DfT did not therefore specifically state in this document that it believed there would be a shortfall in deep sea container port capacity outside the Greater South East, although it has granted all the relevant permissions to allow Liverpool to develop its riverside post-panamax berths. Similarly, the DfT focused on the likely need for additional RoRo capacity only in the South East, rather than elsewhere in the country, which may take into account that it had already granted the relevant permissions for an additional riverside RoRo terminal at Liverpool. Decision letter for Seaforth River Terminal In the DfT’s decision letter on the Seaforth river terminal harbour revision order (March 2007) the Secretary of State for Transport agreed with the Inspector that there is a “demonstrable need for the scheme…” (para.21). Furthermore, the Secretary of State was, “satisfied with the Applicant’s assessment that no other alternative is more suitable for meeting the identified need or is less detrimental to the environment” and agreed that, “the proposals…would enable the port to expand to meet changes in shipping trade and that this would contribute to additional job opportunities, and confer benefits to the local and regional Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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economies” (paragraphs 22-23). The Secretary of State accepted that “the scheme is compatible with national, regional and local planning and transport policies” (paragraph 24). Market-oriented approach to the development of port infrastructure The ports policy set out in the Interim Report is not determinative i.e. there is no intention to dictate to the ports industry where and how it should invest in new port infrastructure; it will be left to the private sector to make investment decisions, within the planning regime. However, the DfT wants to ensure that the ports industry develops to take full account of both the adverse impacts and the benefits of further development at local and regional levels. As the reports states, “…a market oriented approach remains appropriate…there would in general be no additional benefit from a locally or regionally determinative ports policy. We also conclude that only in exceptional circumstances will the Government regard local regeneration as a justification for direct subsidy to a port.” (para.13) Therefore, within an overall policy of sustainable development, the DfT regards market forces as being the major factor in deciding where additional port capacity is likely to be required. The structure of the UK port industry Although the Government is aware of the, “trend towards fewer and larger operators in England and Wales, the existing ownership structure, including a wide mix of private sector ports, trust and municipal (local authority) ports, clearly provides a basis for effective competition.” (para.20). Essentially, the DfT believes that the existing competition rules provide adequate regulation of competition issues. Nevertheless the Department for Transport hints at the issue of the lack of competition in the deepsea container port market in the UK: “… We welcome the fact that the degree of competition in the deep-sea container sector, where there is least diversity in ownership, is enhanced by dynamic Continental hubs such as Rotterdam and Antwerp acting as alternatives” (para.22). The above implies that the Department recognises there could be a lack of competition in the deep sea container port market the development of the post-panamax riverside terminal at Liverpool would help to increase the degree of competition in this market, by providing an additional option for shipping lines seeking berths that can accommodate the deepest drafted vessels. The planning regime for new port developments The Report explains that case-by-case planning decisions on applications for new port capacity will be made by the Marine Management Organisation (MMO), but for the largest
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port projects planning decisions will be made by the Infrastructure Planning Commission (IPC). Both the IPC and the MMO will be required to take full account of relevant National Planning Statements (NPS) and the DfT envisages producing a ports NPS, which will include not just planning for port infrastructure but also for inland freight distribution infrastructure where this is a direct consequence of port activity. The DfT revealed some other planning measures that are likely to be included in the ports NPS: • Port demand forecasts at a national level are likely to be produced every five years, with a comparison made with existing capacity; • All major ports will be recommended to produce Port Master Plans to help coordinate medium-term planning by all relevant stakeholders. These plans will be particularly useful in helping planning for the future needs for road and rail links to ports. Safeguarding The DfT was also quite specific on safeguarding existing port land for the long-term: “The Department believes that there is sometimes a good case for using the planning system to safeguard significant port facilities, even where under-used, given their potential value in the long term. However, in the very long-run, few non-port land uses are themselves completely irreversible and, where there are pressures for alternative use now, it is right to take into account the potential value of other land uses, in our densely populated territory” (para.17). The DfT regards the planning system at a regional and local level as the appropriate way to determine needs for safeguarding, within the following guidelines: • There should be a strong presumption against safeguarding, where ”there is little realistic likelihood of the facility being brought back into significant port operational use within 15 years or where the alternative use being proposed can easily be terminated and the land re-instated to port use within that time”. • “There should be a strong presumption in favour of safeguarding where there is at least a reasonable likelihood of restitution to significant operational use within fifteen years and where the alternative use in contemplation is one, such as residential development, which will be difficult to reverse”. The DfT adds that, “within the range described by these cases, judgment based on appraisal of costs and benefits should be exercised by decision-makers in the planning system” (para. 17). Port Master Plan Guidance Government introduced a requirement for airports to prepare master plans to guide their long-term development, encouraging airport operators and their local and regional partners to think strategically about their long-term growth prospects and how these could be accommodated physically. The DfT has now developed a consultation document on master Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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planning for ports (consultation in Summer 2008). The consultation document suggests that, although the development of master plans is likely to be voluntary, any “major” port that wants to expand its facilities in a way that that has external impacts beyond the port estate will find it much easier to receive the relevant permissions if a master plan has been developed. Government’s consultation document on the introduction of port master plans recommends therefore that ports should undertake the development of port master plans, particularly those handling more than 1m tonnes per annum and expecting to bring forwards one or more substantial development proposal in the next 20-30 years. The aims of a port master plan should include: • • •
Clarification about the port’s own strategic planning for the medium to long term; Assisting regional and local planning bodies, and transport network providers, in preparing and revising their own development strategies; Informing port users, employees and local communities as to how they can expect to see the port develop over the coming years.
It should achieve this by setting out, amongst other things: • • • • • • •
How the port expects to grow and develop its business over time Why this is feasible in the context of wider patterns of supply and demand Where changes of land use are likely to be required to support growth areas What alternative ways of meeting demand have been and will be considered Environmental mitigation and enhancement measures to be taken When individual development proposals will be put forward How people will be consulted both within the master planning process itself and beyond
The guidance suggests that any ports choosing not to produce a port master plan are likely to encounter greater difficulty in bringing forwards any projects that may require expansion in the port estate or port-related land outside the port estate, or that may have significant effects on local roads, railways or social infrastructure (or investment in infrastructure) than would otherwise be the case. Our consultations suggest that awareness of the probable requirement to develop port master plans is limited, beyond local planning authorities on Merseyside for whom the issue is more significant in the light of: • •
The scale of port and port related activities currently; The employment land constraints at the port estate in Sefton (and elsewhere in the district and beyond), proposals to extend the port estate and to use other sites for port-related uses;
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• •
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The projected growth in port activities over the medium and longer terms (due to general uplift in traffic volumes and the development of specific facilities including the Seaforth River Terminal); The existing port access challenges and the need to bring forward a range of transport infrastructure and management solutions; Proposals to recycle operational port land at Birkenhead Docks for non-port uses.
Planners at Sefton and Wirral are keen to see the introduction of port master plans, which they expect to enable more informed decisions in the development of local development frameworks and in individual planning applications. We understand that the Peel Ports are currently undertaking the analysis required to develop a long-term master plan for the port. Although the consultation document emphasizes the need to retain flexibility and ensure that ports can continue to operate responsively, reacting to market opportunities as they emerge, it does set out a number of very specific requirements which will need to be followed to ensure that master plans are accepted as the basis for land use planning and other decisions. These and other issues will be form important considerations in the development of port master plans across the North West and include: • • • • •
Consultation; Timing; Forecasting; Demonstrating that alternative options have been considered; Safeguarding of operational port land.
The guidance sets out requirements for consultation and advises that it will be necessary to allow a minimum of one year from inception to the completion of a final post-consultation port master plan (assuming that core proposals are not changed or challenged as a result of consultation). Guidance advises or requires: •
• •
Pre-Consultation: less formal discussion with a wide range of interested parties, such as shipping lines, hauliers, local amenity groups, NGOs and regulators, transport network providers and regional and local planning bodies; Production of an Exposure Draft: the issuing of a draft plan for discussion; Main Consultation: a single (or if complex or contentious, a two stage) consultation process.
Each stage should allow at least twelve weeks for responses and time for various committee cycles to run their course to ensure that responses from consultees such as local authorities have sufficient consideration and weight. Depending on scale, immediacy and contentiousness of proposals within a master plan it may also be necessary to undertake
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public exhibition of the proposals. Clearly, any port master plans on the Mersey are still in the very earliest stages of such a consultation process. In terms of the timing at which port master plans are prepared, the guidance advises that ports should aim to compete the master plan before the earlier of public consultation on a substantial; planning application and the deadline for input to the next revision of the Integrated Regional Strategy). Draft master plans (which have not gone through formal consultation) will be considered as inputs into the planning system but their consideration will need to be weighted accordingly). Clearly, in preparing long-term master plans for ports (and specifically to demonstrate the need for expansion or investment) it will necessary to produce port-specific forecasts for the principal traffics, drawing on national port forecasts. The master plan should make reconcile or justify deviation from these national forecasts for the principal traffics by explaining the extent to which it is driven by: • • •
Any disagreement with the national forecasts; The port’s own commercial view of its prospects and opportunities; Sub-traffic (sectoral composition of trade) issues.
This may raise some issues over commercial sensitivity, with some ports potentially (and traditionally) reluctant to make such information public. The guidance encourages ports to think carefully about the extent to which such information is genuinely commercially sensitive. Where any forecasts growth is not evidenced in this way in order to protect commercial sensitivity the guidance requires the document to highlight this. This is likely to be an important consideration and area of possible contention in the development of some port master plans across the UK. Where major expansions in port estates or port related land elsewhere are put forwards as master plan proposals it will be necessary to demonstrate that alternative options have been considered and dismissed. These will include recycling of port land, shifting operations to make more efficient use of port land and other forms of intensification of land use. The Department of Transport gives qualified support for the safeguarding of dormant operational land, stating that: •
•
There should be a strong presumption against safeguarding where there is little realistic likelihood of a facility being brought back into significant operational use within a period of fifteen years, or where the alternative use being proposed can easily be terminated and the land reinstated to port use within that time. There should be a strong presumption in favour of safeguarding land where this as reasonable likelihood of a return to significant operational port use within fifteen years and where the alterative use being considered will be difficult to reverse.
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Port master plans must include an explicit safeguarding strategy and these must be discussed with local and regional planning bodies. Again, it will be necessary to draw on port-specific forecasts for particular traffics in order to ground the approach to safeguarding in evidence. This also is likely to be an important consideration and area of possible contention in the development of some port master plans across the UK. 3.5
Hinterland distribution policy
Road Pricing Road pricing is a policy that could be implemented in the long-term so all road users (both private cars and goods vehicles) would be required to pay for the net external costs that they impose on society. That is, road users would be charged for the environmental pollution and congestion they cause to the extent to which these costs are not covered by existing forms of taxation such as fuel duty and road tax. The objective of a road pricing policy would be to use the pricing mechanism to change behaviour, thereby reducing the negative impacts of road transport on the environment, society and the economy. Road users could change their behaviour in response to price signals by changing the route they take to avoid more congested (and more expensive) roads, by travelling at different times of the day or choosing not to travel at all. As the road haulage industry is highly competitive and cost-driven, a permanent increase in the variable cost of road haulage per kilometre in the UK would be likely to have some impact on the choice of port and mode. In the Irish Sea RoRo market, hauliers are more likely to use “local” ports, which would favour North West RoRo ports as these ports provide the most direct link between the major origins and destinations of freight in Ireland and the M62 Corridor/Midlands; an increase in variable road haulage costs should also encourage greater use of unaccompanied RoRo services across the Irish Sea. In the deep sea LoLo market, an increase in the variable costs of road haulage would increase the modal share for inland distribution by rail from the Port of Liverpool. The current position of the UK government on the introduction of road pricing is as follows: “Urban congestion charging, backed by investment in public transport, is our priority. Therefore, whilst it is possible that road pricing could have the potential to be extended to include parts of the national network, that is a decision for the future, to be informed by the development of local schemes, including London, and clear answers to the technological and system challenges” (Towards a Sustainable Transport System, Executive Summary, paragraph 31). There is therefore no immediate policy to introduce road pricing at a national level, although the Government has sought industrial partners to develop the required technology for such a scheme. While the implementation of a national scheme of road pricing including private cars is politically difficult, there remains the potential for its introduction for freight vehicles in the long-term. Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Freight Route Utilisation Strategy The Freight Route Utilisation Strategy (Freight RUS), which was published by Network Rail in March 2007, presented a view of potential rail freight growth on the network and alterations in existing traffic flows that could reasonably be expected to occur on the network by 2015; it also presented a strategy to address the key issues that arise in accommodating these changes. Forecast growth in total rail freight was forecast at about 30% growth in terms of freight tonnes lifted between 2005 and 2014/15 and the greatest growth was expected for deep sea container flows, while the greatest levels of change in demand on a route by route basis were driven by changes in the sourcing of coal for electricity generation. One of the key issues relevant to the North West discussed in the Freight RUS was gauge clearance to W10 for rail-borne deep sea container traffic. The document recommends a “proactive strategy for development of priority core and diversionary/capacity generating routes to W10 gauge” to accommodate 9ft 6in containers on standard wagons to and from the leading deep sea container ports (i.e. including Liverpool). The Freight RUS recognized that the Port of Liverpool was developing further container handling capacity and that the solution to handling further rail growth from the port involves building the Olive Mount Chord and providing access to the WCML at W10 gauge via Earlestown and Runcorn. The appraisal results for the building of Olive Mount Chord and W10 gauge clearance to the Port of Liverpool produced a positive business case and the Freight RUS recommended that it should proceed. The Freight RUS therefore included the reinstatement of Olive Mount Chord and W10 Port of Liverpool to WCML via Earlestown and Runcorn with schemes that should be funded by the DfT’s Transport Investment Fund. This solution has now been implemented: Productivity TIF funding was used to fund gauge enhancement work from the Olive Mount Chord to the West Coast Main Line; funding for the reopening of the Olive Mount Cord itself was secured from the Northern Way, Network Rail, ERDF and Merseytravel sources. Delivering a Sustainable Railway In July 2007 the Department for Transport published the Delivering a Sustainable Railway White Paper, which included the Government’s objectives for rail freight. This document confirmed the Government’s support for rail freight growth and the measures necessary to achieve it. The White Paper described a broad expectation on the part of Government that Network Rail would facilitate a doubling of rail passenger and freight traffic by rail by 2030 (i.e. create the requisite capacity). In the short term (2014/15), Government intends to allocate £200 million to help to create a Strategic Freight Network (SFN), mainly to add capacity at key pinch points. This measure is designed to “give rail freight operators, customers and terminal developers a more stable environment for planning for increased use of rail” (para 9.32). The SFN will also “both complement, and be integrated with, the existing rail network. It would provide an enhanced core trunk network capable of
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accommodating more and longer freight trains, with selective ability to handle wagons with higher axle loads and greater loading gauge”. The White Paper also drew upon the forecasts produced by the rail freight industry and published in the Freight RUS for 30% growth in rail freight between 2005 and 2015, based mainly on an expansion in intermodal traffic. However, Britain has a mixed-traffic railway, where freight and passenger trains operate on the same lines and strong recent growth in both freight and passenger markets has put increased pressure on network capacity. In future, this pressure is likely to increase. Given the environmental benefits of rail freight, the Government made it clear that it will ensure that policies and regulations do not put unnecessary obstacles in the way of future freight growth and that, in specifying passenger services, the needs of the rail freight industry must be considered. The growing demand for rail freight plus increasing passenger demand was therefore recognised by the Government, which introduced the Transport Innovation Fund (TIF) to support the following schemes that benefit national productivity: • • • • •
Gauge clearance and reopening of the Olive Mount chord on the route between the port of Liverpool and the West Coast Main Line. Gauge enhancement between Southampton and the West Coast Main Line; Gauge and capacity enhancement between Nuneaton and Peterborough, providing Felixstowe with a new link to the West Coast Main Line; Gauge and capacity enhancement on the cross-London route between Gospel Oak and Barking; Capacity and capability enhancement on rail routes serving the Humber ports of Hull and Immingham.
The Northern Rail Routes Demand Study The Northern Rail Routes Demand Study (Steer Davies Gleave in association with Moffatt & Nichol, October 2007) was commissioned by the Northern Way and Network Rail to produce unconstrained demand projections for containerized traffic moving by rail to and from ports in the North West, North East and Yorkshire and the Humber. The study produced a series of projections of potential demand, using a scenario-based approach, to reflect a range of opinions provided by stakeholders from the private and public sectors in the North of England. The study concluded that, “The collective views of the industry suggest that the market potential for ports in the North to capture containerised traffic is higher than can be derived from existing forecasts. Moreover, there is a recognition that rail has an important role to play in the inward transportation of goods…” (para.6) As well as additional capacity and gauge clearance to ensure that rail can maximise its potential, the study argued that additional port capacity and rail terminals would be required,
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as well as a different commercial and operational approach on the part of the rail freight operators (e.g. to improve wagon utilization and slot utilization on trains). The projections were focused on the Transpennine corridor and the route between the East Coast Mainline and Water Orton in the East Midlands. The former corridor would mainly be used by short sea containerised traffic between the Humber ports and Liverpool (in both directions) and the latter appears to be a projection for traffic between east coast ports and the Midlands. Neither is directly relevant to the key port-based containerised traffic for the North West to and from the port of Liverpool, which has a national hinterland with services that mainly use the WCML. Conclusion on rail freight capacity Forecast future growth in containerised traffic will lead to additional rail freight traffic on the GB network as a whole and the Government has stated in policy documents that it is committed to ensuring that this growth should be accommodated on the network. The Government has allocated ÂŁ200 million of future funding to the enhancement of the network specifically for freight. However, the major potential shortage of capacity for rail freight is likely to be on the WCML to the south of Crewe. The proposed HST2 would, if funded and constructed, free up capacity on the existing conventional WCML for rail freight. Access to the Port of Liverpool for container trains is improving, with the re-instatement of the Olive Mount Chord and the loading gauge up-grade to W10. This should assist the port to increase the modal share for the existing facility and the planned post-panamax terminal. This will add trains passing across the Manchester Ship Canal at Warrington (on the WCML) or Runcorn, but should reduce trains passing along the WCML at Milton Keynes and along the Cherwell Valley route at Oxford, based on the assumption that some traffic will be won from deep sea container ports in the Greater South East. 3.6
Regional Policy
Introduction The following section provides an overview of the key statements of regional economic development and planning policy, identifying key actions and implications for the regionâ&#x20AC;&#x2122;s ports. We also consider sub-regional policy in Merseyside, where the maritime industries play a particularly important role in economic development policy. North West Regional Economic Strategy The Regional Economic Strategy (RES) in the North West, published in 2006 and led by the NWDA, provides a 20-year rolling plan for economic development in the region, and provides an update to the 2003 RES, acknowledging changing priorities and resources. Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Three major drivers are at the core of the strategy: improving productivity and growing the market, growing the size and capability of the workforce, and creating and maintaining the conditions for sustainable growth. These are underpinned by five themed chapters each with a series of actions through which to achieve the overall vision: • • • • •
Business Skills and Education People and Jobs Infrastructure Quality of Life
Ports are considered within the fourth transformational action of the RES, as a Key Growth Asset, to be fully utilised; therefore the potential of regional ports in contributing to GVA is realised to some extent within the strategy. In particular, the port of Liverpool is considered a key regional strength and one of the key gateways for national and international trade. As a result, the strategy considers it necessary to deliver appropriate skills to support the growth of Ports and Airports. The strategy’s main objective of relevance to ports is to develop the “infrastructure required for sustainable economic growth” including necessary transport and communications provision. The RES notes several opportunities to improve the capacity and quality of mass transit, linking the delivery of key transport links and enhancements (e.g. M57-Seaforth link; Olive Mount Chord (now delivered); rail enhancement to Seaforth Docks; Heysham-M6 link) with the growth of regional ports. Strategically, this growth is intended to reduce reliance on congested southern ports, shifting the focus toward northwest ports. Liverpool is viewed as a driver of city regional growth; therefore growth of its port supports the city’s regional importance directly, and strengthens the region in terms of the development of its key economic assets. Reference to sub-regional influence in securing transport funding can be found below, under Regional Funding Allocations. Indirectly, ports are noted to benefit the North West’s economy by helping to attract investment and new employment opportunities, therefore improving accessibility to ports is inferred to be essential. Improving the road network is intrinsically associated, as part of the strategy, with the transfer of freight movements from road to water. North West Regional Spatial Strategy The Regional Spatial Strategy (RSS), published in 2008, establishes a vision for a region that by 2021 has acted to deliver sustainable development, leading to a higher quality of life for all, and reduced social, economic and environmental disparities. The strategy provides a framework for development and investment in the northwest region over the next fifteen to twenty years. Complementary to other key regional strategies and national planning policy statements, the RSS aims to make such policy pertinent to opportunities and challenges specific to the northwest region.
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The RSS incorporates regional transport policies, which are aligned with the strategy’s vision of sustainable development and include regional priorities for investment in transport and related operations making the strategy directly relevant to regional port activity. Within the strategy, Ports and Waterways policy stimulates the wider context of economic activity generated by ports in the region, supporting the development of land-side surface access plans to facilitate the movement of freight and passenger traffic, and encouraging the transfer of freight from land to water transport. Utilisation of existing infrastructure is promoted, as is the development of good road, rail and inland waterway connections. The strategy’s policy on Ports and Waterways is intended to be read in conjunction with three other policies: ‘The Coast’, ‘Managing the North West’s Coastline’, and ‘Promote Environmental Quality’, ensuring trade, travel and economic activity takes into account protection of the natural environment and biodiversity. The RSS reflects on the importance of the North West’s ports in providing valuable landfall sites for servicing offshore operations such as oil and gas, fisheries and emerging industries such as offshore wind farms. The potential of disused areas of dockland, such as Liverpool, Barrow, Bootle, Maryport, Preston, and Whitehaven, in providing significant opportunities for regeneration, is recognised as key to bringing new employment to previously derelict and economically depressed areas. Port operators and other stakeholders are urged to develop land-side surface access plans to accommodate existing and projected freight and passenger traffic, supported technically by the inclusion of port boundaries in Local Development Documents. Subsequently, development that may impede the operational requirements of a port should not be permitted within this boundary. The safeguarding of land close to ports for logistics, transport and port-related development where there is likelihood of restitution to significant operational use within fifteen years is advocated, and land with wharf-side frontage is recommended to be protected for future uses that require a water connection. New Regional Strategy 2010 Principles and Issues Paper In this paper, ports are considered an important asset in improving the connectivity of the northwest region, subsequently supporting the growth of the region’s major cities. Local infrastructure and rail services are considered poor, however, and improvements essential to the increased efficiency of economic assets such as ports. Regional ports are also identified as being part of the unique contribution the northwest will make to the future UK, European and World economy. Regional Funding Advice: The Advice of the North West Region In July 2008 the Government published guidance to the regions on preparing Regional Funding Advice (RFAs, formerly known as Regional Funding Allocations). This process requires regional partners and Local Authorities to provide a set of priorities to be
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encompassed by funding already allocated in the most recent Spending Review, together with indicative future projections. The objective of Regional Funding Advice is to ensure regional strategies are based on realistic funding assumptions, and subsequently are integrated, complementary and secure. In theory, this means that: • • •
Transport, housing and regeneration, economic development and skills elements are properly joined-up; Strategies themselves translate into specific spending decisions by Departments, agencies and delivery partners; and Through the publication, albeit with caveats, of indicative planning assumptions, some certainty exists over long-term investment streams crucial to economic development and regeneration.
The North West is explicit in its exploration of the scope to include rail transport decisions within RFA, and consequently gives advice to Government on the whole transport infrastructure, including road, rail, ports and airports. It specifically includes: • •
The Access to the Port of Liverpool Improvement scheme and; Completion of Heysham to M6 Link, which supports the growth of the port of Heysham by providing efficient trading links.
The details of these projects are as follows: •
Access to the Port of Liverpool Improvement: Highways Agency proposals for improved access along the A5036 (Dunningsbridge Road) to the Port of Liverpool from the motorway network are identified in the North West’s Regional Funding Advice, given the strategic importance of the route and the Port of Liverpool. Proposals are currently at the pre-options phase and no preferred solution is as yet identified. The A5036 forms part of the Trans-European Road Network (TERN) reflecting its national and international importance as a freight route. The road is built up for much of its length and there are significant development pressures, with a number of sites identified for office, industry and retail development. In order to inform the North West’s RFA submission the Highways Agency has estimated the outturn cost of constructing a new road link from Switch Island through to the A5036 at Seaforth at between £131m and £201m, with a central estimate of £166m (assuming that work starts in 2015/16). The strategic case for investment on this scale rests on the need to combat existing congestion, delays and poor journey time reliability and the need to accommodate the major projected increases in traffic volumes at the Port of Liverpool.
•
Completion of Heysham to M6 Link: With a total scheme cost of £137 (£133 million of RFA), the M6 Link will provide a direct road link for Heysham ferry traffic to the M6, and is expected to reduce congestion in Lancaster and assist the regeneration of the
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Lancaster and Morecambe area. The start date for the main highway works is planned for 2010 with an expected completion date of 2014. The Mersey Partnership: Liverpool City Region Development Programme Report, 2006 This report documents progress made by The Mersey Partnership and its partners in delivering action and pursuing investment in the five strategic priorities for the region: •
• • • •
A Creative and Competitive City Region (Environmental Economy Physical Building Infrastructure Health Digital Development Sector Development Knowledge Economy and Innovation Raising Enterprise Levels, Inward Investment); A Premier Destination (Mersey Waterfront, Regional Park, Tourism, Culture, and Sports Offer, European Capital of Culture); A Well Connected City Region (Ports of Liverpool, Connectivity, Mersey Gateway, Liverpool John Lennon Airport); Talented and Able Population (Skills for Productivity, Full Employment); Sustainable Communities (Neighbourhood Renewal and Liveability, Housing Strategy).
The significance of the SuperPort scheme to the Well Connected City Region priority is strengthened within the plan, as it is perceived this has the potential to provide some of the greatest impact on accelerating economic growth within the City Region. This supports maximisation of the benefits from common ownership of port and airport by integrating the ports, John Lennon Airport, logistics and supply chain hinterland into a ‘single cohesive and effective entity serving the North of England’. Liverpool SuperPort Endorsed as a ‘step change’ in the future competitiveness of the Liverpool City Region, the SuperPort concept has been stimulated by the economic success of other cities that host logistics clusters. The SuperPort consists of a cluster of freight and international passenger facilities in the Liverpool City Region and along the Manchester Ship Canal corridor. The vision for the Liverpool SuperPort is, “To bring together and integrate the strengths of the Ports, Airports and Freight Community to create a ‘SuperPort’ for freight and passenger operations within the Liverpool City Region that will become a key driver of its economy. It will create the most effective and cost efficient environment for freight cargo logistics and passenger transit in the UK. “ The strategy for development of the SuperPort incorporates the following aims: • • • •
Increased productivity/economies of scale, leading to greater cost competitiveness; Market creation and development; New investment; Stakeholder engagement;
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Innovation and the environmental agenda
There will be scope for relevant skills development, technology and ICT infrastructure and supporting professional and other services. It is intended the concept will fulfil the objectives of promoting innovation, economic development and regeneration, and environment (particularly sustainable distribution) and is regarded as having the potential to be a transformational initiative for the City Region. Physical “pipeline” projects include the postPanamax container terminal facility, the 3MG rail freight distribution park in Halton, Port Weston, Port Salford and the development of the World Cargo Centre at Liverpool John Lennon Airport. Key private sector stakeholders include Peel Holdings and the Stobart Group. 3.7
Port rate revaluation
Background The revaluation of the system of business rates for ports has led to some port-based businesses receiving backdated tax bills in September 2008 when they had previously paid no rates. This may be leading to some business failures in the sector, some firms are threatening to relocate away from port estates, the issue has been discussed in Parliament and some port-based companies are taking legal action against the Government. The Government lost a vote on the issue n the House of Lords in March 2009. This section of the report seeks to describe in outline how the issue arose and provides some views on the potential impact on the ports sector in the North West. Business rates in the port sector appear to have been anomalous until 2005 in that the rates were often paid by the port authority as a levy on the authority’s turnover, rather than by the tenant who is the immediate commercial beneficiary from the rateable land. The Government decided to harmonise the valuation of port land for business rate purposes with other economic sectors and the general business rates revaluation from 1 April 2005 provided an opportunity to change the system. The port landlords have received rebates for rates already paid since 2005 and their tenants have received bills in 2008 back-dated to 2005. Although the overall increase in the tax revenue for the Treasury is marginal, the burden of the tax has therefore been re-distributed from landlords to tenants. Implementation of the changes is being rolled out across 55 ports in the UK, with those on the Humber being affected first, followed by those on the Mersey. Despite the fact that the changes relate to the period from 1 April 2005, the bills based on the new system were only issued to the port tenants in 2008. The tenants are therefore being expected to pay three years of backdated business rates, which they believe they have effectively already paid through their rental agreements with their landlords, as well the current year’s rates. Despite the fact that the Government has agreed that the bills can be paid in eight annual instalments to spread the burden, some 70 companies (employing 3,000 people), have been affected in the North West and Louise Ellman (MP for Liverpool Riverside) secured an adjournment debate in the House of Commons to discuss the issue; Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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some of the companies are seeing a judicial review of the rates revaluation process and are refusing to pay their bills. Due to the perceived economic impact on local businesses, the local authorities, which are required by law to collect the rates, are choosing not to enforce the bills until the legal position is clarified. Opponents of the changes are requesting that government withdraw the requirement for backdated rates and delay the implementation of the new ports rate system until April 2010. In January 2009 the Treasury Select Committee recommended that government adopt this approach. At the time of writing, the Government is still arguing that backdated bills remain appropriate and should be paid over the eight-year period. The revaluation and its administration We are not taxation or accountancy experts, but it appears that the revaluation in itself may have been justified in that it sought to bring the ports sector into line with the rest of the business rates system. The Government has agreed to legislate to spread the taxation burden over eight years to spread the financial burden. As long as the revaluation exercise is applied consistently across the country and with little time lag between implementation in the different regions, there should not be significant competition issues created between the various port regions. However, the changes to the system appear to have been poorly administered, with consultation letters on the changes being sent to the port landlords, rather than the tenants who had to pay the rates under the new system; the VOA appears to have assumed that the landlords would inform their tenants, but they had little incentive to do so when this might lead to a renegotiation of tenancy agreements and the port landlords knew they would receive a rebate. Furthermore, the bills appear to have been sent very late after a lengthy revaluation process, so that individual companies have built up relatively large tax liabilities. The VOA has now introduced a system of fast-track appeals for businesses that wish to question or challenge their new ratings assessments - although it is unclear whether these fast-track appeals will consider the extent to which changes have been brought forward in an appropriate way. As part of this fast track process, the VOA is undertaking to give an initial response to the points raised in any appeal within ten working days and to give full decisions within two months in all but the most complex cases. The potential impact The potential impact on individual businesses will vary considerably depending on their individual financial position. Some of the companies affected, which appear to be mainly stevedores and terminal operators, are arguing they will be forced to close because of the size of the tax liability where this is greater than their net current assets on their balance sheet; the on-going financial crisis that started in 2008 may not help the financial position of individual companies if they are unable to obtain credit from their banks. To date, at least two companies on the Mersey have closed citing this issue:
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•
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Thomas Nichols Brown (TNB) went into administration in December 2008 as a result (the company claimed) of a £1.3m tax liability, with a smaller Wirral-based sister company, Dobro, also becoming insolvent. Stanton Grove, operator of the forest products terminal at Royal Seaforth Dock and the Langton Rail Terminal, went into administration in January 2009, again citing a backdated demand for rates of £1.5m as the cause.
Based on the limited evidence available to us given the scope and resources available within this study, it appears possible that some businesses may indeed fail as a direct result of the revaluation of port rates. However, it is our view that it is unlikely that this will have any longterm impact on the amount of traffic passing through the region’s ports. If one business fails, its competitors in the same port or in a neighbouring port (probably in the North West) are likely to benefit, even if there may be some reduction in employment and some short-term dislocation of activity. Some businesses have been threatening to move out of port estates. If a business chooses to relocate outside the port altogether, then this suggests its business is not reliant on the existence of the port and such a switch of economic activity does not necessarily imply there would be a reduction in economic activity or employment. In addition, as long as the revaluation is applied consistently across the country, there should be little or no scope for displacement of activity from the North West to other regions. On the other hand, administrative failure on the part of the VOA, leading to inconsistencies between the regions could distort the market and could lead in the medium- to long-term to some switch of activity between ports in different regions. It is in theory possible that the new rates system will result in fundamental changes of behaviour on the part of key customers, where a substitute is available. On the Humber it appears that DFDS has sought to pass on the cost of its rate bill to its customers, including BMW, which has an import terminal at the DFDS terminal at Immingham. BMW are arguing that they may move their added value activities to the Continent if the cost increases are imposed by DFDS. It is also possible that less cargo is held in ports if an implicit “subsidy” to on-port warehousing has been lost through the change in the rating system. However, in our discussions with Mersey Maritime we have not yet identified any known threat of loss of business to other UK or continental ports, given its geographic location. 3.8
Conclusions
Transport & ports policy The primary goals of future UK transport policy up to 2015 are likely to be reducing carbon emissions from transport while maximising the competitiveness and productivity of the UK economy. This appears to be the key conclusion from the work of Eddington and Stern and does not require a major change in transport policy as such, even if the development of a strategy at a national level is likely to mean a greater emphasis on public sector Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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interventions in particular locations. As regards ports directly, the Government’s plans for national transport networks include the development of a strategic freight network that improves connections between regions and ports. The North West’s ports, with a major deep sea container port that is centrally located to serve the whole of GB, plus a large number of smaller ports serving regional or sub-regional markets, should be well-placed to contribute to this on-going policy of “sustainable distribution”. In many respects the DfT’s emerging ports policy maintains the status quo in that Government does not intend to indicate where and how much additional port capacity is required. These decisions will be left to the mainly private sector port operators and the planning system. In addition, the Government believes that the diverse ownership of ports in the UK serves the country well and does not need to change. The emerging ports policy places a strong emphasis on planning, with the potential for fast-tracking some port developments where they are regarded as being strategic in nature and quite a strong policy in favour of safeguarding port operational land against residential development that would prevent any return to port operational use in the future. In terms of public funding the Government is following Eddington’s recommendations in being prepared to be more proactive in supporting road and rail schemes that maintain and enhance the efficiency and sustainability of links between ports and their hinterlands. The Port of Liverpool has therefore been able to secure TIF funding for the Olive Mount Cord and loading gauge enhancement to W10 between the port and the WCML. Environmental & economic policy There is now a strong likelihood of increased regulatory, political and commercial pressure to respond to the need to mitigate against climate change through a range of measures. Many of these will need to be taken by shipping lines and regulatory organisations worldwide but there will also be increased pressure on port operators to respond. Port operators are likely to have to respond to the mitigation agenda through innovations such as cold-ironing and promoting modal shift for, in particular, inland distribution. Local air and water quality in the vicinity of ports is a growing policy concern and will require a range of measures in response. Port operators may also need to adapt to the impacts of climate change over the longer term, introducing new flood and storm defences, ensuring that new port developments address habitat loss and the need for replacement against a backdrop of rising sea levels (and shifting high and low tidal zones), the siting and defence of port facilities and port-related industries. The economic impact of ports, both locally and on the productivity and efficiency of the wider regional and national economy, is well recognised in policy. The need to invest in key landside transport infrastructure, in, around and on routes to and from the ports is clearly identified in the Eddington Review, as is the potential to achieve high economic returns and value for money on public sector investment. National transport policy and regional
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economic development, planning and transport policies echo this and identify a range of specific investments that will be brought forward in the short-to medium terms. The importance of the North West Ports to local, sub-regional and regional economic development is underscored by policy in the region. This is particularly so on Merseyside, where the concept of a sub-regional Superport (integrating all modes) and creating a worldleading logistics hub is a key feature of economic development policy. Port rate revaluation Business rates in the port sector appear to have been anomalous until 2005 in that the rates were often paid by the port landlord rather than by the tenant who is the immediate commercial beneficiary from the rateable land. The Government decided to harmonise the valuation of port land for business rate purposes with other economic sectors and the general business rates revaluation from 1 April 2005 provided an opportunity to change the system. The port landlords have received rebates for rates already paid since 2005 and their tenants have received bills in 2008 back-dated to 2005. The potential impact on individual businesses will vary considerably depending on their individual financial position. It appears possible that some businesses may indeed fail as a direct result of the revaluation of port rates, but it is unlikely that this will have any long-term impact on the amount of traffic passing through the regionâ&#x20AC;&#x2122;s ports. If one business fails, its competitors in the same port or in a neighbouring port (probably in the North West) are likely to benefit, even if there may be some reduction in employment. If a business chooses to relocate outside the port, then this suggests its business is not reliant on the existence of the port and such a switch of economic activity does not necessarily imply that there would be a reduction in economic activity or employment. The only exception to this pattern is where an importer might choose to warehouse goods at a Continental port rather than a UK port; this may reduce the amount of added value work conducted in the UK (such as new car preparation prior to delivery). It is also possible that less cargo is held in ports if an implicit â&#x20AC;&#x153;subsidyâ&#x20AC;? to on-port warehousing has been lost through the change in the rating system.
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ANALYSIS OF PORT SUPPLY & DEMAND
4.1
Introduction
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This chapter provides demand forecasts for the regions’ ports as a whole, based on the DfT port demand forecasts produced by MDST in 2005-07. We have then used the MDST GB Port Supply and Demand Model, as in 2005, to provide an analysis of the balance of supply and demand for port infrastructure in North West England up to 2030 for all broad types of port cargo. 4.2
Demand forecasts for North West ports to 2030
The demand forecasts included in this section are for the regions’ ports as a whole, based on the DfT port demand forecasts produced by MDST in 2005-07. The forecasts are independent of infrastructure developments, which are most relevant to the LoLo sector i.e. the forecasts reflect national forecasts for the different types of traffic, are not capacityconstrained and assume that each region’s ports secures the same market share of total traffic in 2003 as in 2005 (the base year for the DfT national port traffic forecasts). However, the forecasts have been re-based to 2007. Table 4.1 provides demand forecasts for unitload traffic (LoLo and RoRo) for the regions’ ports as a whole, based on the DfT port demand forecasts produced by MDST in 2005-07. The forecasts indicate that over the period 2007-30, LoLo traffic is expected to grow on average by 2.7% per annum, while RoRo traffic is expected to grow by 2.5% per annum. This is at lower rate than during the period 2002–07: Liverpool grew its LoLo volumes by 6.2% per annum on average over the period 2002-07, while the Irish Sea RoRo market as a whole grew on average by 4.8% per annum. The forecasts reflect the view that the Irish economy will continue to integrate with the UK and Eurozone economies over the next 20 years or so, if at a slower rate of growth than in the last 15 years. Table 4.1: Demand forecasts for unitload traffic for the NW Ports to 2030 Traffic type LoLo RoRo
Units Thousand TEU Thousand units
2007 675 924
2030 1,247 1,635
Change 2007-30 85% 77%
CAGR 2007-30 2.7% 2.5%
Source: MDS Transmodal, based on forecasts produced for DfT in 2007
Table 4.2 provides demand forecasts for non-unitised traffics for the regions’ ports as a whole, based on the DfT port demand forecasts produced by MDST in 2005-07. The forecasts indicate that over the period 2007-30 bulk traffics are expected to see little or no growth.
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Table 4.2: Demand forecasts for non-unitised traffic for the NW Ports to 2030 Million tonnes Traffic type Liquid bulk Dry bulk Other general cargo
2007 17.4 10.4 1.5
2030 17.5 9.9 1.5
Change 2007-30 1% -4% -
CAGR 2007-30 -0.2% -
Source: MDS Transmodal, based on forecasts produced for DfT in 2007
This is broadly in line with recent historic trends: North West ports have experienced an overall decline of bulk traffics of 1% during the period 2003-07, with liquid bulks growing by 4%, dry bulks declining by 11% (mainly because of a fall in the volume of coal imports for electricity generation) and an increase of 26% in semi-bulk and general cargo traffics (mainly due to a significant increase in steel imports). Within the overall trend there are likely to be significant fluctuations in individual bulk traffics up to 2030, due to changes in energy policy and in the patterns of world trade. 4.3
North West port supply
Table 4.3 provides a summary of port supply, based on existing physical facilities on a berthby-berth basis in 2009. Table 4.3: North West Berth Supply, by Quay Length and Draft, 2009 Max. vessel draft (metres)
LoLo Dry bulk Liquid General cargo/ RoRo* Total bulk semi bulk
RoRo*
Quay metres
Hectares
0.1-5.0
-
-
320
1,133
-
1,453
-
5.1-6.0
-
200
-
1,425
545
2,170
13.3
6.1-7.0
-
183
695
1,415
517
2,810
11.0
7.1-8.0
183
884
1,275
410
-
2,569
-
8.1-9.0
-
949
1,979
6,150
233
9,311
2.0
9.1-10.0
-
945
1,359
945
400
3,649
2.0
10.1-11.0
-
-
-
-
-
-
-
11.1-12.0
-
-
2,511
-
703
3,214
4.6
12.1-13.0
1,097
5,174
-
3,464
-
9,735
-
13.1-14.0
-
-
-
-
-
-
-
14.1-15.0
-
-
360
-
-
360
-
15.1+
-
-
-
-
-
-
-
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1,280
8,335
8,499
14,942
4%
24%
24%
42%
% total quay metres
2,398 35,454 7%
32.9
100%
Source: MDS Transmodal Ltd *‘roro’ can accommodate trucks, trailers or trade cars.
As in 2005, the analysis indicates the availability of about 35,000 quay metres, with 89% of berths being for bulk and multipurpose general cargo berths. 4% of quay length relates to dedicated LoLo berths - at Seaforth Container Terminal and Irlam on the Manchester Ship Canal. While RoRo berths represent only 7% of quay length in the region, the key factor in RoRo berth supply is landside storage and therefore the supply of RoRo terminals is usually in terms of hectares. Approximately 33 hectares are available, with the majority of this located at the region’s RoRo terminals in Liverpool, Birkenhead (Twelve Quays), Heysham and Fleetwood. 4.4
Supply-demand balance
Methodology As in 2005, the MDST GB Port Demand and Supply Model was used to provide a view of the port supply and demand in 2030, assuming no additional infrastructure development up to 2030. This model was developed, originally for the RSPB, to ‘explain’ how existing port traffics can be handled by the available infrastructure using ‘across the board’ generic productivity formulae; in practice productivity will vary from port to port because of different equipment employed or differences in the ships served. The model works by: • •
•
•
•
Sorting demand (trade) into world areas and cargo category; Applying minimum vessel size requirements by cargo mode and world area and increasing these over time according to the different cargo handling modes and trade route; Estimating the productivity of each port terminal on the basis of cargo mode of appearance, vessel size and the parameters of the berth. The productivity formulae are increased with time. Starting with the largest ships’ first, by an iterative process calculating how much the capacity of a particular port is used up by ships employed on different trade routes. The largest ships are allocated first in order to make the most economical use of infrastructure. Where forecasts imply a shortfall in capacity at a given port, the model redistributes traffic from other ports where there are capacity shortfalls to adjacent ports if available capacity exists. The general assumptions in the model are that dry-, liquid-
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and semi-bulk traffic can be re-distributed by up to five ports along the coast, while RoRo and trade car traffic can be redistributed by up to 13 ports. The extent to which traffic of a particular type can switch between ports is based on the consultants’ experience and observation of the market and, in particular, the extent to which traffic is footloose. Bulk traffics are usually relatively low value and will not bear significant inland distribution costs and tends to lead to their being shipped reasonably close to their inland origin or destination and reduces the number of ports around the coast that might be competitive. In the unit load markets, serving a national market and with higher value cargoes, the traffic may be more footloose and so may be handled, if necessary, through a wider variety of ports. The model therefore generates a ‘cascade’ effect, whereby as ships increase in size, they require deeper water, migrate to deepwater ports and leave capacity at shallow ports. If the current port becomes capacity constrained, or the ship is too large, then the model attempts to fit traffic to neighbouring ports by shifting cargo along the coast in either direction before it is classified as unsatisfied demand. A capacity shortfall for that traffic in that port region is then deemed to exist. As the traffic carried in deeper drafted vessels switches ports, so the original infrastructure is freed up and used by shorter distance traffic arriving in smaller vessels. Using this model approach, as the process repeats itself, so the smallest, shallowest port infrastructure eventually becomes obsolete. Results The following tables provide the results for each mode of appearance up to 2030 and are expressed in terms of traffic that is not accommodated in North West ports. This inability to accommodate traffic within the model can be addressed in two ways, by: i) Building or enhancing berths in the North West; ii) ‘Allowing’ cargo to switch beyond North West ports to national ports more than 5 or 13 ports along the coast. LoLo Demand-Supply Balance to 2030 Assumptions: • Demand = DfT port demand forecast for NW ports for 2030 • No new capacity • Redistribution of traffic allowed to up to 13 ports along GB coastline Million tonnes North West
2007 2030
Accommodated 5.4 4.8
Not accommodated 5.0
Total 5.4 9.8
% Not Accommodated 51%
Source: MDST GB Port Supply & Demand Model
The forecasts of port traffic demand in the North West in the LoLo sector are for about 85% growth in traffic in terms of units up to 2030 (see Table 4.1). By 2030 the modelling suggests that some 51% of forecast LoLo traffic could not be accommodated at Liverpool. It Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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should be noted that some traffic that would ideally have ‘chosen’ to pass through Liverpool in 2030, found a ‘home’ at a port outside the region because of the switching between ports allowed in the model. RoRo Demand-Supply Balance to 2030 Assumptions: • Demand = DfT port demand forecast for NW ports for 2030 • No new capacity • Redistribution of traffic allowed to up to 13 ports along GB coastline Accommodated Not Total Million “quasiaccommodated tonnes”* North West 2007 26.0 26.0 2030 27.8 10.0 37.8
% Not Accommodated 27%
Source: MDST GB Port Supply & Demand Model * Takes account of relative amount of space required by different types of RoRo traffic
The forecasts of port traffic demand in the North West in the RoRo sector are for 77% growth in traffic in terms of units up to 2030 (see Table 4.1). By 2030 the modelling suggests that some 27% of forecast RoRo traffic could not be accommodated at North West RoRo ports. It should be noted that some traffic that would ideally have ‘chosen’ to pass through a North West port in 2030, found a ‘home’ at a port outside the region because of the switching between ports allowed in the model. Dry Bulk Demand-Supply Balance to 2025 Assumptions: • Demand = DfT port demand forecast for NW ports for 2030 • No new capacity • Redistribution of traffic allowed to up to 5 ports along GB coastline Million tonnes North West
2007 2030
Accommodated 10.4 8.2
Not accommodated 1.8
Total 10.4 10.0
% Not Accommodated -
Source: MDST GB Port Supply & Demand Model
The forecasts of dry bulk demand in the North West between 2007 and 2030, suggests there could be a shortfall in capacity at Liverpool in 2030.
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Semi-Bulk Demand-Supply Balance to 2030 Assumptions: • Demand = DfT port demand forecast for NW ports for 2030 • No new capacity • Redistribution of traffic allowed to up to 5 ports along GB coastline Million tonnes North West
2003 2025
Accommodated 1.5 1.4
Not accommodated 0.1
Total 1.5 1.5
% Not Accommodated 6%
Source: MDST GB Port Supply & Demand Model
The modelling of the supply-demand balance for semi-bulk port traffic in the North West between 2007 and 2030, suggests there could be a small shortfall in capacity in the region, probably due to a gradual increase in average ship size up to 2030. Liquid Bulk Supply-Demand Balance to 2030 Assumptions: • Demand = DfT port demand forecast for NW ports for 2030 • No new capacity • Redistribution of traffic allowed to up to 5 ports along GB coastline Million tonnes North West
2007 2030
Accommodated 17.4 17.6
Not accommodated -
Total 17.4 17.6
% Not Accommodated -
Source: MDST GB Port Supply & Demand Model
The modelling of the supply-demand balance for liquid bulk port traffic in the North West between 2007 and 2030, suggests that existing modelled berth capacity is adequate. 4.5
Conclusion
The modelling using the MDST GB Port Supply and Demand Model suggests that, given forecast trade growth up to 2030, the North West is likely to require additional port capacity to accommodate LoLo and RoRo traffic. The results of the modelling for bulk traffics suggest that some additional port capacity might be required by 2030 for, in particular, dry bulk traffics; however, the bulk trades are affected to a high degree by future Government energy policy, which makes the demand forecasts more uncertain.
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IMPACT ASSESSMENT
5.1
Introduction
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This chapter sets out the key constraints and opportunities for each of the commercial ports in North West England and concludes with an assessment of the economic contribution of the ports to the North West regional economy. The analysis of constraints and opportunities has been informed by a stakeholder consultation exercise, as well as analysis of the secondary sources available for the study. 5.2
Constraints & Opportunities for North West Ports
This section sets out the key potential constraints and opportunities for each port up to 2030 and also considers the main land use issues relating to each port. Growth, contraction and changes in cargo patterns at the North Westâ&#x20AC;&#x2122;s ports have clear implications for land-use and transport planners around the region. Changes in port volume and trade patterns can drive demand for additional maritime land - either expansion of port estates or increased demand for employment land to support maritime operations beyond the port estate. They can also create opportunities for rationalisation of dock land and for the recycling of that land for a range of alternative uses, including residential, commercial and industrial use. For local and regional economic development purposes port operators and other maritime businesses, including those engaged in value-adding activities, may need to be able to secure an appropriate volume of employment land in appropriate locations, although this needs to be balanced against other land use planning issues. Any such schemes will also place additional demands upon existing and proposed transport infrastructure. Clearly, within Peelâ&#x20AC;&#x2122;s Ocean Gateway proposals and the Liverpool Superport strategic initiative currently being pursued, and other significant proposals elsewhere in the region, there are a range of schemes that are likely to generate both additional demand for and supply of employment land. As they are separate facilities, Birkenhead Docks and the Twelve Quays ferry terminal have been treated separately from the Port of Liverpool, even though they are in common ownership. Barrow Transport issues Barrow is focused on a number of specialised trades; in particular it provides a railconnected marine terminal for BNFL from which nuclear fuel is shipped and is involved in offshore supply services, including for offshore wind farms. In June 2009, for example, the Port completed an agreement with DONG Energy to provide an 18-acre construction base for the development of the Walney Offshore Windfarm.
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Its major tenant on the port estate is the BAE Systems facility for shipbuilding and the construction of submarines, but this facility generates little or no commercial traffic and the BNFL traffic is very low in terms of volumes. Otherwise, Barrow’s main commercial traffics are dry bulks such as sand, granite and aggregates for the local hinterland and the port handles wood pulp bales for a toilet roll manufacturer. Access to the port is via a long dredged channel and lock system and so there is no direct access to the sea, but vessels up to a draft of 8.5m can be handled. The port has the deepest water of any port between the Clyde and the Mersey, but has only a sub-regional hinterland and is remote from major markets. These factors are likely to make it difficult to attract significant volumes of additional cargo. Road access to the M6 is relatively poor on the mainly single carriageway A590, although this was improved by the High Newton and Low Newton by-pass scheme (completed in 2008); significant improvements to the A590 are unlikely and would not have a significant impact on the port’s prospects. There is an active rail link, but this is used only for BNFL traffic as other traffics are for a local, sub-regional hinterland that are distributed inland by road. Land use issues The port has significant amounts of development land available and some of this land is most likely to be used for regeneration and marine tourism, rather than for the development of additional freight traffic. Opportunities for expansion in value-added activity at the Port of Barrow appear to centre on West Cumbria’s Energy Coast and include ongoing specialist nuclear traffic, traffic to meet the needs of the construction and operation of any nuclear new builds and possible further expansion of cruise ship activity. The port may also benefit from construction activity related to the development of above ground installations near Barrow to receive Liquid Natural Gas (LNG) via a subsea pipeline that would be linked to Floating Regasification Units located about 35km offshore; all the relevant planning permissions were obtained for the project, called Port Meridian, in June 2009. Constraints • • • •
Relatively remote from major markets, largely serving a local industrial and agricultural hinterland; Road access is relatively poor, via a mainly single carriageway A590 to the M6; Dredging of the access channel is currently funded by the MOD/BAE Systems, rather than by commercial shipping; Significant regional competition, particularly from Workington, Heysham and Lancaster.
Opportunities • • •
Providing specialised port-based services to the offshore industry and BNFL; Maintaining its role as a local port for shippers of dry bulk cargoes; Nuclear newbuild traffic;
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Possible increase in the number of cruise ship calls; Sustainable distribution role, taking cargo as close as possible to its inland origin/destination, including the possible further development of the port as a railhead for southern Cumbria.
Conclusion Barrow enjoys deep water and has some effectively tied traffics related to the offshore sector and the nuclear industry. However, the port otherwise has a relatively poor hinterland and is remote from major markets. Land availability for the development of commercial cargoes is unlikely to be an issue at Barrow. There may be some limited scope for the development of additional rail traffics over the next 20 years, perhaps serving the local area rather than handling port-based cargo. Given current market and policy trends, its future roles are likely to be: • •
A base for the offshore and nuclear industries; A sustainable distribution hub (waterborne, rail and road freight transport), principally serving a sub-regional hinterland for bulk goods.
Birkenhead – Twelve Quays This purpose-built ferry terminal was opened in 2001 and is owned by Peel Ports. Norfolkline operates services to Belfast and Dublin from RoRo berths on the river, providing 24-hour access to the berths without the need to negotiate locks. The facility serves a national hinterland for RoRo traffic. Norfolkline has been rationalising its fleet on the Irish Sea to adjust its capacity to lower demand conditions in 2008-09. The facility enjoys good access to the M53 and this motorway has a reasonable amount of capacity at most times of the day, although there may be a capacity issue on the two-lane section near Ellesmere Port during peak periods. Constraints •
• •
Strong competition for RoRo freight volumes from Holyhead (in the accompanied RoRo market) and Liverpool (in the unaccompanied RoRo market); both Stena Line and Irish Ferries have increased their freight capacity through Holyhead, although the port remains less of a threat in the unaccompanied market, as the port has little space available for parking. In the short-term, the lack of growth in the Irish Sea RoRo market, which has forced Norfolkline to rationalise its Irish Sea fleet; In the medium- to long-term, the lack of parking space immediately adjacent to the berth, particularly for unaccompanied trailers, may restrict the ability of Norfolkline to fully exploit likely trade growth.
Opportunities •
Policy/legislative changes relevant to the RoRo market (increasing the variable cost of road haulage) that should increase Twelve Quay’s market share.
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In the medium- to long-term, growth in the Irish Sea RoRo freight market, both to the ROI and Northern Ireland. Development of Regional Distribution Centres close to the RoRo terminal, which could serve both the North West and the Irish market.
Conclusion Twelve Quays, with its 24-hour unrestricted access direct to the sea and proximity to major markets, is the best-appointed RoRo facility in the North West. The lack of land for the storage of trailers may become a constraint in the future. Despite the decline in the Irish Sea market in the short-term, Twelve Quays should benefit from expected trade growth in the medium- to long-term. Given current market and policy trends, its future roles are likely to be: • •
A major RoRo facility serving the GB-Ireland market (i.e. a national role); Given sufficient land availability adjacent to the terminal, the facility could help to support the development of distribution activity serving both the North West and the Irish markets.
Birkenhead Docks Transport issues Birkenhead Docks are configured as an enclosed multi-berth dock system and handle a wide variety of dry and liquid and semi-bulk cargoes. The docks enjoy quite deep water, but are dominated by the Port of Liverpool, which has an almost identical hinterland for the range of cargoes Birkenhead Docks can handle and which enjoy considerable economies of scale. The lack of an active rail link to the port may restrict its development potential as a site for distribution activity, but land availability is very unlikely to be a constraint on development. The availability of land could provide an opportunity for the development of non-port or portbased distribution activity. The port enjoys good access to the M53 and there are plans to re-connect the Docks to the rail network, based on an existing track bed. Since the 2005 report, the whole of the Cammell Laird site in Birkenhead has been purchased by Peel and its main tenant is Northwestern Shiprepairers (part owned by Peel), which operates a ship repair and conversion facility. The site has therefore been retained as for maritime industrial use and could, in theory, be developed as a RoRo facility and/or distribution site with its deep water and the potential to develop a new private roadway (along the track bed of a former railway) from the site to Birkenhead Docks and the M53. Land use issues Planning policy in Wirral includes a commitment to maintaining the integrity and viability of port operations within the district, although the dockland designation of employment land has
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been deleted in order to provide increased flexibility. We have already noted the potential for developing logistics and national distribution centres at Birkenhead (see Section 5.2 above). There is a major proposal from Peel for a long-term mixed-use development called Wirral Waters that would cover approximately 260 hectares of brownfield land in and around Birkenhead Docks. This would involve the recycling of port land that is currently regarded by the developers as being redundant and/or surplus to requirements or which can be adequately replaced by facilities elsewhere. Two sectors within the Wirral Waters master plan (Twelve Quays and West Float) will remain in use as port and maritime employment areas whilst East Float will be redeveloped as a major new office, residential and leisure destination and Bidston Moss will be redeveloped for retail, leisure and residential use. Some maritime employment uses will need to be decanted from East Float to West Float and other locations. As part of its consideration of Peel’s Wirral Waters residential proposal, Wirral MBC is keen to work with the port operator to better understand: • • •
The volume and nature of land required for the operational port at Birkenhead Docks over the short, medium and longer terms; The nature and location of any land required to secure expansion of the operational port; The volume and location of port land that is currently in operational use that could be made available for other uses, and the timing at which this land will become available. Where replacement facilities are provided Wirral MBC are keen to see it demonstrated that this will be on a like-for-like and one-for-one basis and that West Float is used intensively.
As such, planners at Wirral are keen to see a port master plan prepared for the dockland area, and to understand what national and local port projections will mean for the operational docks. Planning applications have now been received for residential and retail development within East Float, with more applications expected to follow shortly. Opportunities to re-establish rail access from the Bidston-Wrexham line to West Float are currently be explored. If a second RoRo terminal is to be created on the Wirral side of the Mersey there may be access issues from the M53 to be addressed. Constraints • •
Availability deepwater facilities at Liverpool, serving a similar hinterland; Current lack of an active rail link to Birkenhead Docks.
Opportunities •
Land available for development (perhaps for distribution activity);
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Maintaining its role as regional port for shippers of dry and liquid bulk and semi-bulk cargoes, serving a reasonably high quality hinterland; Sustainable distribution role, taking cargo as close as possible to its inland origin/destination; Development of (probably limited) rail traffic, based on existing traffic.
Conclusion Given current market and policy trends, Birkenhead Docks’ future roles are likely to be: • •
A sustainable distribution hub (waterborne, road and possibly rail freight transport), principally serving a regional hinterland; Potential development of distribution activity serving both the North West and Irish markets.
Bromborough (Mersey Wharf) Owned by the Victoria Group, Mersey Wharf handles a number of minor bulk flows on a riverside berth, competing in the local “small ports” market. Its future role is likely to be as a small sustainable distribution hub for bulk and semi-bulk goods (waterborne and onward road distribution), principally serving a regional hinterland. Fleetwood Fleetwood offers a single RoRo berth located on the banks of the River Wyre outside an enclosed dock system for the Stena Line ferry service to Larne in Northern Ireland, which serves a national hinterland. Fleetwood’s capacity for RoRo ferries is constrained by a draft restriction and the vessels deployed by Stena Line are reaching the end of their useful economic lives. The RoRo terminal land was extended recently and the port operator believes there is potential to expand RoRo volumes at the facility. Other land available for development at the port is adjacent to the existing marina and fish docks and is unlikely to be developed for commercial port activities due to the lack of adjacent deep water. A substantial area of port land was sold to a house builder about 18 months ago and the site has now been levelled, awaiting an improvement in market conditions and the Fleetwood-Thornton Area Action Plan allocates significant employment land on redundant dockland. Road access on the single carriageway A585 from Junction 3 of the M55 to Fleetwood is subject to congestion during peak hours. The road hauliers are likely to be aware of the extent of the congestion and will allow for it to ensure they meet the cut-off times for ferry crossings. Any future improvements to the A585 would shorten journey times, but the user benefits for hauliers from any scheme are unlikely in themselves to justify the investment. Local partners are seeking to re-open rail access to the port, with a route protected by Lancashire County Council for this purpose and a feasibility study for this has recently been
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completed. There is, however, unlikely to be demand for a rail freight service, given the nature of the traffic (fast-moving accompanied RoRo traffic). Constraints • • • • • •
Maritime access restrictions limit the size of RoRo vessel that can be accommodated; Access to M55: some sections of the 13 mile single carriageway A585 are congested at peak times; One major customer (Stena Line), deploying relatively old vessels; In the short-term, the lack of growth in the Irish Sea RoRo market; Strong competition from Heysham, Liverpool and Twelve Quays in the RoRo market; Failure of Stena Line to invest in new vessels for the route.
Opportunities • • • •
In the medium- to long-term, growth in the Irish Sea RoRo freight market; Any improvements to the A585 would reduce journey times for hauliers; Stena Line decides to invest in new vessels; Further development of Fleetwood as a leisure port.
Conclusion Fleetwood has been successful since 2005 in maintaining its market share in the Irish Sea RoRo market and ABP has extended the size of the RoRo terminal area; this is despite the port’s restricted maritime access and strong regional competition from facilities with geographic advantages. Stena Lines’ vessels are reaching the end of their useful economic lives and the ferry operator will soon have to decide whether it intends to replace them with (if possible) larger vessels. If Stena are not prepared to invest in new vessels, this may effectively imply the closure of the port to commercial traffic in the medium to long term and a future focus on leisure activities. If Stena decides to invest in new vessels and the port remains open to commercial traffic, its future role is likely to be as a RoRo facility serving the GB-Ireland market. Garston Garston is located 10km from the city of Liverpool on the River Mersey. The range of commodities handled is varied and includes steel products and agri-bulks. The port has concentrated on developing long-term relationships with specialist operators and provides added value services (e.g. bagging, blending and stock control). The port is configured as an enclosed multi-berth dock system and can service ships of 10,000 dwt and up to a maximum of 150m length, 19m beam and drafts up to 8.3m, although in practice it tends to handle smaller vessels. A 13-acre site at the port may be leased for a waste-to-energy plant and the scheme is currently going through the planning process. No additional land is likely to be needed for expansion of port activities.
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The port enjoys good access to the core trunk road network and is well located to serve the M62 Corridor and Midlands markets. Although the port is located adjacent to a Freightliner terminal and the formation is still in place, it is not currently rail-connected and there are no plans to re-connect the port to the network. Land use issues Planners at the City of Liverpool report no pressure for port expansion at the Port of Garston or other additional port related employment land and there are no proposals or pressure for transport investments to improve access to the Port. It is likely that over the next 10+ years ABP may look for opportunities to rationalise facilities. Land at Cressington Heath was sold to Redrow for housing development (now completed) in 2005 and it is possible that this could be repeated in future. There have also been proposals for a waste processing plant on port land, and although these have been withdrawn, planners in Liverpool believe they may be revived in future. Constraints •
Significant competition from the Port of Liverpool, which has deeper water facilities, serving an almost identical hinterland.
Opportunities • •
Maintaining its role as regional port for shippers of dry bulk and semi-bulk cargoes, serving a rich hinterland; Sustainable distribution role, taking cargo as close as possible to its inland origin/destination.
Conclusion Garston enjoys quite deep water and is well-located to serve the M62 Corridor market. It is, however, dominated by the Port of Liverpool, which has an almost identical hinterland for the range of cargoes Garston can handle and which enjoys considerable economies of scale. Given current market and policy trends, its future role is likely to be as a small sustainable distribution hub for bulk and semi-bulk goods (waterborne and onward road distribution), principally serving a regional hinterland. Heysham Transport issues The key traffic at Heysham is unaccompanied RoRo traffic to Ireland (Norfolkline and Seatruck Ferries) and RoRo freight to the Isle of Man (Isle of Man Steam Packet Company). Seatruck Ferries has introduced new purpose-built “Heysham-max” vessels for the route. The port also handles significant volumes of trade cars for export to Ireland, which may have been affected by the downturn in the Irish economy, and smaller volume of bulk cargoes.
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A key issue for the Port of Heysham has been the development of a new access road for Heysham and Morecambe to the M6, as the existing A683 route is via Lancaster and a single crossing of the River Lune. Following a Planning Inquiry in 2007 planning permission was given in February 2008 for the development of the Heysham-M6 Link Road (Northern or Orange Route). This will join the existing Heysham Bypass to Junction 34 of the M6 by the creation of a new 4.8km dual two-lane carriageway. Total costs are currently estimated at £137m, with £133m provided by RFA and the remainder by Lancaster City Council. The project achieved Programme Entry status in January 2009. Major highways works are expected to begin in 2010, with the road fully open by 2014. The road should significantly improve links for freight traffic between the Port of Heysham and the M6 as well as diverting all traffic between the M6 and Morecambe and Heysham peninsula, relieving congestion in Lancaster City Centre. There is an existing rail link to the port, but no traffic at present, although schemes have been considered in the past for the transport of trade cars and containers by rail. Land use issues The Port of Heysham site is extensive and planners at Lancaster City Council do not anticipate any significant pressures on port land for the foreseeable future, although there may in future be a need to increase the area of hardstanding for lorry parking. Lancaster’s Local Development Framework makes provision for further port related development at a range of sites in the district (including the Port of Heysham Industrial Park) and this provision appears to be adequate for the foreseeable future (subject to market conditions and any future changes in he port operator’s strategy). The development of the Heysham M6 Link Road may open up a range of sites along its length for logistics uses. Constraints • • • •
Maritime access restrictions: minimum of 5.1 metres of water at all states of the tide, which limits the size of RoRo vessel that can be accommodated; In the short-term, the lack of growth in the Irish Sea RoRo market, which has forced Norfolkline to rationalise its Irish Sea fleet; More remote from major unaccompanied RoRo freight market than Liverpool/Twelve Quays and also strong competition locally from Fleetwood; 8-mile section of A683 to M6 is single carriageway, via Lancaster city centre.
Opportunities •
Investment by existing and well-established RoRo customers: Sea Truck is investing in new larger vessels that are “Heysham-max”;
• • •
In the medium- to long-term, growth in the Irish Sea RoRo freight market; Further development as a regional port for bulk and semi-bulk cargoes; Heysham to M6 Link Road: development of fast road link from Port to M6 to reduce journey times and increase journey time reliability;
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Policy trends (that increase the variable costs of road haulage) may favour the development of unaccompanied RoRo traffic.
Conclusion Heysham has three well-established ferry operators mainly handling unaccompanied trailers, which policy trends may favour, and the Irish Sea RoRo market should resume its growth in the medium to long term. The road link to the M6 is to be improved and the new road link should be fully open by 2014. The major constraints in the medium to long-term relate to maritime access. The port is rail-connected and there could be a business case for handling trade cars or containers by rail. Given current market and policy trends, its future role is likely to be as a significant RoRo facility serving the GB-Ireland market (i.e. a national role). Lancaster A trust port owned by Lancaster Port Commission and located at the mouth of the River Lune, Lancaster has a dock (Glasson Dock) and river berths, which can accommodate small coastal and short sea vessels. A variety of general cargo and bulk cargoes are handled, although there are severe restrictions on the size of vessels that can be handled. The port has a single key customer in Glasson Grain, which makes it vulnerable if that customer chose to leave the port. The port has reasonable road access, given the volume and nature of the traffic handled. The port performs a useful role in providing facilities for exporting bulk materials to the Isle of Man, providing some competition to the Isle of Man Steam Packet Company which otherwise enjoys a monopoly on freight movements to the island. Constraints • • •
Maritime access restrictions: Maximum draft (4.5 metres) restriction limits the size of vessel that can be accommodated, while the average short sea and coastal vessel size is increasing. Access to M6: Road access via Lancaster city centre. Significant regional competition, particularly from Heysham.
Opportunities • •
Maintaining its role as local port for a few key shippers of dry bulk cargoes, using low cost facilities. Sustainable distribution role, taking cargo as close as possible to its inland origin/destination.
Conclusion Restricted maritime access to the port and poor road access, plus strong regional competition from facilities with geographic advantages, may lead to a reduction in traffic volumes over the next 20 years. This could undermine the economics of the port, despite its likely low operating costs, leading to its closure. However, it appears to have an established Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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relationship with a key customer and, given current market and policy trends, its future role is likely to be as a small sustainable distribution hub (waterborne and onward road distribution), principally serving a sub-regional hinterland. Liverpool Development proposals As by far the largest port in North West England, with deep water and an extensive hinterland, the Port of Liverpool has a number of key developments and proposals including: •
•
•
The development of post-panamax berths outside the lock gates at Seaforth at a likely cost of about £175 million will raise the existing capacity from 0.9 million to 1.5 million TEU. The post-panamax terminal has received all the relevant permissions following the issue of a Harbour Revision Order by the Secretary of State in March 2007. Peel Ports are currently undertaking engineering and cost assessments. The timing of the development of the new terminal may be delayed by current market conditions. Phase 2 of the LIFT zone, with 0.4 million square feet of warehousing, has been given planning permission, but its development requires the relocation of some activities within the port area. The development of the Langton River Berth to provide additional deep water RoRo berth for services to Ireland. All the relevant permissions were obtained a number of years ago, but the facility has not, as yet, been developed.
Road hinterland links With expected expansion in traffic volumes through the port, particularly from the proposed post-panamax berths, inland congestion is becoming an issue; there is already congestion on the A5036 at peak times and this route passes through residential areas en route from Seaforth Docks to Switch Island, where strategic port traffic can access the motorway network (M57 and M58). Rail hinterland links Rail freight forecasts, produced by MDST for the Rail Freight Group using the MDST GB Freight Model, indicate that by 2030 the proportion of containers transported inland by rail from the Port of Liverpool would be 31% of total traffic. This is in the context of an increase in the tonnage of freight transported by rail from the current 123 million tonnes to 200 million tonnes by 2030, at a compound growth rate of only 2% per annum. The re-opening of the Olive Mount Chord increases the number of trains that can operate in any particular day into and out of Seaforth Docks 12. £9 million of funding for the Olive Mount Chord scheme was provided by the Northern Way, Merseytravel, Network Rail and the European Union Objective 2. Prior to the improvements, the port was accessible to Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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freight trains only by a single track at Edge Hill. By re-opening the Olive Mount Tunnel near Wavertree Technology Park station, the existing Seaforth Docks line can now link directly with the West Coast Main Line heading towards Manchester. Work to lay 750 metres of new track through the tunnel, install new points and update signalling equipment started in summer 2007, and was completed by the end of 2008. This investment has also helped secure wider investment for an up-grade of the loading gauge for access from the port to the WCML to W10, which will allow trains carrying high cube containers to access the West Coast Main Line via Earlestown; this loading gauge up-grade work should be completed by 2012. Proposals are currently being developed to re-establish rail links to Canada Dock in order to allow an increase in the volume of scrap metal that can be brought into Liverpool by rail rather than road, serving consolidated scrap metal operations. Inland waterway links Apart from the Manchester Ship Canal, the Leeds and Liverpool Canal, which is a broad gauge waterway, provides access by barge to Liverpool Docks. In theory, there could be potential for the inland distribution of niche low value bulk commodities, such as waste and steel scrap, on this waterway although this would be subject to the commercial viability of individual flows. Land use issues: Sefton The Port and Maritime Zone identified in Sefton Council’s UDP covers a total of 363 hectares within Sefton. It includes much of the Port of Liverpool port estate and adjoining land to the south and east. It has not proved possible to obtain a figure for the operational area of the Port during the timeframe available for this study. Similarly, Sefton Council have commissioned an employment land review (ELR), the results of which will not be available during the course of this study. However, it is clear that the port and the wider Port & Maritime Zone is currently very constrained in terms of employment land (a view which will be reflected in the ELR). The port estate as currently defined is thought to be under significant pressure. We understand that this has restricted the ability of the port and the surrounding area to compete successfully for a number of inward investment proposals, including at least one major national import centre. Peel Ports are keen to secure an expansion of the port estate. The port operator has Permitted Development Rights within the port estate. As such, there has historically been no need for any regular or formal flow of information on the rates of take-up and development within the port estate. Sefton Council perceives the Port as being something of a “black box”, creating additional difficulties in planning for employment land across the district. The Council believes that the absence of information on take-up, or opportunities for the recycling or intensification of land use is such that the Council is less well placed to assess and substantiate the need for additional maritime employment land.
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There are a number of broad strategic options to meet the need for additional port and portrelated employment land within and beyond the Port & Maritime Zone. These options, which are not mutually exclusive, are: •
•
•
•
Development of a candidate SPA and RAMSAR site immediately to the north of the dock estate: Discussions with Sefton MBC, English Nature and DEFRA have been ongoing for some considerable time about the potential designation of this site, which enjoys very strong protection as a candidate (rather than designated) site of European environmental importance. If this land is so designated, it could only be developed if the port operator could demonstrate that there was a national need for the land and it is likely that adequate replacement land would need to be provided as mitigation. The NWDA has encouraged DEFRA to bring forward a decision on whether the site should be designated in order to help clarify the way forwards. The extension of the port estate landwards: this would be a major and complex undertaking requiring CPO and other acquisition and decanting of a range of users and land uses. It would also generate planning issues in relation to residential amenity. Off-site container storage at a range of locations, including sites along Dunningsbridge Road and the M58: The NWDA are consulting on the potential designation of a strategic regional site along Dunningsbridge Road which would ‘provide nationally significant freight handling and logistics facilities associated with the Port of Liverpool to assist the regeneration of South Sefton/North Liverpool; and accommodate related manufacturing and process industries’. More intensive use of the port estate including the currently redundant parts of North Docks (Liverpool Waters): This would include consideration of opportunities to increase the areas of hardstanding by infilling (and subsequent development on made ground) and more intensive use of existing land where possible.
Demonstrating that the potential for more intensive use of the port estate, the scope for rationalisation of facilities within the existing boundary and relocation of certain activities (e.g. container storage) from within it and the viability of developing proposed activities or facilities off site have been fully explored (in line with RSS Policy RT6). This would be to show that the relevant steps have been taken to make the most of existing land and to minimise any future land-take prior to any efforts to pursue the first three options. These issues will need full investigation in the Port Master Plan. A number of major developments have been completed or approved within this zone recently, including: • •
Liverpool Produce Terminal: a new 8,500 m² cold storage facility to help Liverpool win new business in the importation of produce to the UK. Liverpool International Freeport Terminal (LIFT) Phase 2: Planning permission has been granted for the further development of 37,000 m² of modern warehousing at this multi-modal logistics hub (sea, road, rail and inland barge) within the Port Estate
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(with Phase 1 offering 56,000 m², now fully let). This will expand the port’s logistics capacity to over 370,000 m². The Seaforth River Terminal: a major expansion in Liverpool’s capacity to handle container traffic, as discussed above.
These developments, and the wider growth forecast in Section 4 above, will continue to drive demand for employment land in the Port & Maritime Zone and to place further demands on the transport infrastructure serving the Port. The Port of Liverpool’s scale and diversity of traffic is such that it generates opportunities to attract a range of value-adding activities into and around the Port & Maritime Zone; for example, the recent attraction of a large palm oil processing plant to a site on Regent Road, reflecting the Port of Liverpool’s role as a major centre for the edible oils industry. However, the most important strategic opportunity over the next 5-10 years is likely to be growth in port-centric distribution (for example, the Tesco import centre at Teesport and similar centres operated in or close to ports by Argos, B&Q and Asda). Liverpool’s position as the only deep- sea container port on the west coast of England, its central UK location and proximity to large centres of population means that is well placed to take advantage of the growing willingness of logistics managers to consider port locations, providing sites can be assembled and made available. While the development of port-centric distribution is likely to generate significant additional employment in close proximity to areas of high employment need, assembling the large site required would need to be fully justified by the port operator, given the significant planning issues involved. The justifications put forward by the port would need to take into account the extent to which expansion is possible onto redundant port land in Liverpool North Docks. Other potential opportunities for value adding activity at Liverpool include: • • • •
Trade cars (Pre-Delivery Inspection and finishing); Fresh produce (value adding activities such as processing, localisation and preparation for specific retailers); Recycling (e.g. Renewal and Recovery Parks, with material brought in by rail and barge); Waste to energy plant.
Sefton MBC’s proposals for the Thornton Switch Island Link Road Scheme are identified as a regional priority in the Northwest’s Regional Funding Advice and they achieved Programme Entry into the DfT’s major scheme investment programme in October 2008. The scheme consists of the provision of a new single carriageway highway (4.2km) between the A565 Southport Road and the Switch Island junction, bypassing the communities of Thornton and Netherton. At its western end, the existing A565 Southport Road will be realigned to create a new roundabout junction linked to the existing A565 Park View by a new spur link. At its eastern end the new link will be connected to the major traffic signal controlled junction at Switch Island.
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The Major Scheme Business Case submitted to and accepted by DfT envisages a high level of interaction between the scheme and the proposals for improved access to the Port of Liverpool being developed by the Highways Agency. In particular it will help to relieve traffic congestion at the A5207 Copy Lane Junction with the A5036, which affects access and journey times to the Port of Liverpool. DfT has committed to funding 90% of the base cost of the scheme and 50% of the Additional Risk Layer (ARL, an additional contingency to protect against increases in scheme costs set at £3.8m). In total, DfT will provide a maximum of £17.5m to the scheme based on current estimates, with the balance of £3.6m provided by Sefton MBC, giving total project costs of £21.2m. Procurement and scheme preparation (including design and survey, land assembly) work is currently underway. It is envisaged that the scheme can achieve planning approval (following Public Inquiry) by about July 2010 with Final Approval from DfT following in May 2011. On this basis building works could commence in August 2011, with the new road opening in November 2012. Land use issues: City of Liverpool The southern end of the Port of Liverpool and related maritime industries corridor stretches into the City of Liverpool and there are a number of significant port and maritime activities in this area. There is also a greater supply of available employment land at this southern end. However, the current major port operations within the City of Liverpool are in the south at the Port of Garston (see above). The Liverpool Waters scheme is a major, long-term mixed-use development area covering 60 hectares along the Mersey between the Princes Half Tide Dock and the Bramley Moore and Nelson Docks to the north. This would involve the recycling of port land that is currently regarded by the developers as being redundant and/or surplus to requirements. Constraints • •
• • • • •
Lack of available development land within or near the port estate; Potential capacity increases in the LoLo market in SE England, although demand is likely to outstrip schemes with planning consent. The development of deep sea LoLo capacity at Bristol could also pose some threat, if only in providing a west coast alternative (in planning terms) to Liverpool. In the short-term, the lack of growth in the Irish Sea RoRo market, which has forced Norfolkline to rationalise its Irish Sea fleet; Strong competition for RoRo freight volumes from Holyhead, which has increased freight capacity (although less strong in unaccompanied market, with little space); Lack of riverside RoRo berths in the medium- to long-term, although Peel Ports have the necessary permissions in place to develop such berths, if a suitable customer is available; Local opposition to expansion of port and new access road if there are negative impacts on residents; Congestion on port access road (A5036) in medium to long term.
Opportunities
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• • • •
• • • • •
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Possible failure of SE GB ports to significantly increase LoLo capacity, leading to requirement for capacity elsewhere in GB; Development of two post-panamax berths outside lock gates at Seaforth to accommodate latest generation of deep sea ships and the development of additional LoLo capacity to cater for organic growth in existing traffic within docks; Enhanced rail access to port, with loading gauge clearance to W10; Potential for the Port of Liverpool to distribute 31% of its containers inland by rail by 2030; In the medium- to long-term, growth in the Irish Sea RoRo freight market; Opportunity for west coast port to serve deep sea services using post-panamax vessels on direct Mediterranean-East Coast North America services (and Liverpool is best located port on West Coast to serve whole of GB); New port access road to avoid congestion on the A5036; Policy/legislative changes relevant to RoRo market which should increase Liverpool’s market share as RoRo traffic switches to unaccompanied routes; Development of Langton riverside RoRo terminal; Deep water facilities and economies of scale available to shippers should allow Liverpool to continue to dominate many semi-bulk and bulk trades in the North West region; Development of a major multi-modal distribution hub at the port, based on port estate (freight village concept with expansion of LIFT) with good road, rail and maritime links and warehousing to serve both the North West and Irish markets.
Conclusion Liverpool’s LoLo traffic should return to growth relatively soon and the port can expand its capacity within the deepwater docks, with some modest capital expenditure, by moving some existing customers to elsewhere in the port area. However, the lock gates cannot accommodate post-panamax vessels, the world’s container fleet is increasing in size and these post-panamax vessels are now generally deployed by the major lines between the Far East and Europe and between the Far East and the west coast of the United States. In the future a number of factors may create an opportunity for a west coast port to serve postpanamax vessels on round the world services (services that pass through the Suez Canal to connect the Far East with Europe and then continue to transit the Panama Canal) that are not calling at the same range of deep sea container ports in the North Sea. In this event Liverpool is likely to be the west coast port in the best position to develop post-panamax berths in that it is well-located to serve the whole of the UK market from a central point, with good road and rail links to all GB regions and through its feeder links to Ireland. In the RoRo freight market Liverpool is in a strong competitive position, with its location, deep water and good road links providing the port with “natural” competitive advantages, particularly if the port is able to develop the Langton River berth on the back of an agreement with a customer. The market has declined in 2008-09, but in the medium- to long-term, growth should return to the Irish Sea RoRo market. Given current market and policy trends, Liverpool’s future roles are likely to be as:
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A major deep sea “gateway” port for the region and Great Britain, handing the full range of deep sea traffics; The only west coast deep sea container port, able to accommodate post-panamax vessels handling both direct calls by deep sea vessels, transhipment traffic to Ireland and traffic fed from other UK and Continental deep sea container ports; The major Irish Sea RoRo port in the North West region, following the development of a riverside terminal; A major sustainable distribution hub (waterborne, rail and road freight transport), serving a national hinterland, with associated warehousing.
The port has a shortage of land within the port estate and in the medium to long-term, land availability is likely to be a key constraint to the port’s development. Manchester Ship Canal Transport issues The 35 mile long Manchester Ship Canal is a linear port, stretching from Eastham locks, where the canal joins the Mersey estuary, inland to Manchester (Salford and Trafford). The Port also offers the QEII Dock, which has a separate entrance off the estuary outside the Eastham lock gates. The Canal has a long established business in petroleum and chemicals partly based around the location of Shell’s biggest refinery in the UK at Stanlow. There are various facilities along the length of the Canal ranging from dedicated berths serving tank storage and/or plant to port complexes at Runcorn, Irlam and Ellesmere Port. The major traffic is crude oil and refined petroleum products via Shell’s refinery at Stanlow, but the Canal’s wharves also handle a wide variety of other bulk cargoes such as chemicals, fertilisers, potash, salt and maize. A container service to Irlam Wharf was opened in 2004 (now a barge service feeding Seaforth), although this traffic is likely to switch to Port Salford if this latter development is given planning permission. Although traffic across most of the wharves is reasonably stable, there appears to have been a shift of traffic towards the deeper water facilities on the Canal, such as at Ellesmere Port. The Manchester Ship Canal provides access to the Weaver Navigation, which is navigable by barge to Northwich and then Winsford in Cheshire. In theory, there could be potential for the inland distribution of niche low value bulk commodities on this waterway by small coastal vessels, but this would be subject to the commercial viability of individual flows and would probably require some dredging. There are a number of potential land use developments on the Canal, which are port/transport-related, and are either designed to maximise port/distribution activities where sites on the Canal are also linked by road and rail or as mitigation by the developer (Peel) for potential residential developments on existing port sites elsewhere in the developer’s portfolio of land holdings.
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Port Ince: Potential development of a site at Ince as a facility for handling dry bulk cargoes, which would also have a 51-hectare Resource Recovery Park, fed by rail, road and waterborne transport. Planning permission has been submitted for this scheme. Port Salford: is a potential development as an inland, rail-linked distribution park, with an intermodal terminal and maritime access via the Canal; the distribution park would have warehousing facilities to serve the North West region, served by rail, road and barge/short sea services on the Canal. The barge/short sea services would provide a link with the deep sea container services at Seaforth Docks. For rail freight the scheme would allow services to avoid the congested through platforms at Manchester Piccadilly Station and may therefore also result in enhanced rail access to Trafford Park and, potentially, reduce congestion in the Manchester rail hub (Oxford Road-Piccadilly corridor). Port Salford will require significant investment in road and rail infrastructure; road access will be via the A57 to the M60, the M62 and the M6 and a The developer estimates that the development of Port Salford will create some 2,100 direct jobs. Planning permission for the necessary transport works has been given by Trafford MBC and the Highways Agency have withdrawn their holding direction, allowing Salford MBC to determine the planning application for Port Salford. A planning application from Peel Holdings has been submitted to Salford MBC and is to be considered by the Councilâ&#x20AC;&#x2122;s Planning and Transportation Regulatory Panel. Planners at Salford do not envisage further employment land demands over and above those that will be met by the proposal itself. Port Wirral is a potential port development located on land adjacent to the existing Queen Elizabeth II Dock at Eastham, and next to the entrance to the Manchester Ship Canal. This would provide mitigation for the loss of port land at Ellesmere Port and Runcorn Docks (which would be redeveloped), with the transfer of these facilitiesâ&#x20AC;&#x2122; dry bulk and semi-bulk traffics. Port Wirral would have road access to the M53 and rail access via a re-instated line. Given the proximity of the site to the Vauxhall car plant, it might provide potential for the export of cars by sea directly from the Mersey. Port Warrington is an existing distribution site (37k square metres), with a further 5 hectares of land for development for distribution activities. The site is adjacent to the Manchester Ship Canal, there is an existing berth and rail access is also achievable. Mersey Gateway Port: Opportunities to redevelop the Port of Weston in Widnes as a bulk shipping and coastal feeder port are currently being considered by the Stobart Group.
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Other land use issues There are a number of other proposals along the Ship Canal that involve, or are related to, the recycling of port land that is currently regarded by the developers as being redundant and/or surplus to requirements or which can be adequately replaced by facilities elsewhere. These include: •
•
Ellesmere Quays: The redevelopment of dockland in order to create approximately 7,500 homes over a period of circa 30 years, together with supporting social and community infrastructure. Runcorn Waterfront: A residential development of over 4,000 homes, a district centre and a commercial area of over 50,000 square metres on currently operational dockland, with port facilities transferred to the proposed Port Wirral development.
There are a range of redevelopments of unused and underused dockland facilities along the Manchester Ship Canal within Greater Manchester, including Irwell Park Wharf, Pomona Wharf and further redevelopment of Salford Quays. Constraints • •
Competition from Liverpool and Garston for many trades, given the additional shipping costs involved in using the Canal and reasonably cheap road haulage; Limited maximum ship size compared to Liverpool.
Opportunities •
Development of port and distribution facilities at “Port Salford”, “Port Ince”, “Port Warrington,” Port Wirral” and “Mersey Gateway Port”; all would have road and rail connections, with distribution sheds. “Port Salford” would be a major distribution hub for the North West region, while “Port Warrington” would be a smaller scale multi-modal distribution facility. “Port Ince” would handle recyclables traffic, based mainly on the Resource Recovery Park and “Port Wirral” would mainly be providing for a switch of port traffics from existing port facilities that Peel hopes to redevelop.
•
Sustainable distribution role, taking cargo as close as possible to its inland origin/destination, by both waterborne transport and rail.
Conclusion The Manchester Ship Canal has considerable potential for sustainable distribution, taking cargo inland closer to its origin or destination. In part to address this policy need, Peel Holdings is seeking to develop a major distribution park at “Port Salford” to serve the general distribution market, as well as at “Port Warrington”, “Port Wirral” and “Port Ince”. Land availability seems unlikely to be a constraint on the development of the Manchester Ship Canal. Given current market and policy trends, its future role is likely to be as the location for sustainable distribution hubs (waterborne, rail and road freight transport),
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principally serving a regional hinterland. It would also provide a suitable location for the development of industrial activities requiring access to maritime transport. Silloth The port of Silloth handles a variety of bulk cargoes (principally grain, molasses and fertilisers) and competes principally with Workington for traffic with origins and destinations in the North/West Cumbrian sub-region. However the mainstay cargo of the port continues to be specially selected bulk grain discharged directly into Carrs Flour Mills, located on the north side of New Dock. The facilities at Silloth are within an enclosed dock system, with seven berths offering a total quay length of 590m. Depth is limited to 5.5m and the port is restricted to handling vessels of about 3-4,000 dwt. Road access is adequate, given the volume and nature of traffics handled, and there does not appear to be any demand for improved access. Constraints • • • •
Maritime access restrictions: maximum draft (5.5 metres) restriction limits the size of vessel that can be accommodated, while average short sea and coastal vessel size is increasing; Relatively remote from major markets, largely serving a sub-regional hinterland, which makes it difficult to attract new cargoes; Dependent on a single key customer; Significant regional competition, particularly from Workington.
Opportunities •
Maintaining role as local port for a few key shippers of dry bulk cargoes, using low cost facilities;
•
Sustainable distribution role, taking cargo as close as possible to its inland origin/destination.
Conclusion Restricted maritime access to port and poor road access, plus strong regional competition from facilities with geographic advantages, may lead to a reduction in traffic volumes over the next 20 years. However, its ownership by a major ports group should help to ensure its commercial survival due to the economies of scale that ABP can provide (e.g. in terms of spreading management overheads across a number of ports). In addition, the port has a key customer, which has a long-term relationship with the port. Land availability is limited, although this should not be a significant constraint as the port is unlikely to develop to any significant extent over the next 20 years. Given current market and policy trends, its future role is likely to be as a small sustainable distribution hub (waterborne and road freight transport), principally serving a sub-regional hinterland.
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Workington Transport issues The Port of Workington, which is owned by Cumbria County Council, handles a range of mainly bulk traffics for its sub-regional hinterland. Some traffic is related to industrial plants in West Cumbria, while others are related to the agricultural hinterland of the port. A tank farm located at the port serves local petrol stations. Traffics have fluctuated in recent years, with a general downward trend. A key constraint for the port historically were that the port’s finances were not been ringfenced and so the port was unable to invest in additional facilities and in maintenance of its core infrastructure. However, the port now has a more stable financial position. Major capital investment by West Lakes Renaissance will assist in maintaining and enhancing the port’s facilities;; the port has secured some new offshore wind farm business and there may also be potential for handling traffic related to nuclear decommissioning and nuclear newbuild, the latter, in particular, requiring the handling of dry bulk construction materials. Road access via the A66 to the M6 is good and the port is rail-connected, with the port acting as a rail freight terminal for the sub-region. Land use issues There are unlikely to be constraints on the amount of back-up land at the Port of Workington up to 2030. Opportunities for expansion in value-added activity at the Port of Workington appear to centre on West Cumbria’s Energy Coast and include fabrication and shipping for off-shore wind farm development and nuclear new build traffic. Constraints • •
Relatively remote from major markets, largely serving a local industrial and agricultural hinterland; Regional competition, particularly from Silloth and Barrow.
Opportunities • • • •
Maintaining role as local port for shippers of dry bulk cargoes, serving in particular its local industrial hinterland; Handling traffic related to nuclear decommissioning and nuclear newbuild construction work; Developing as a base for offshore wind farm activity; Sustainable distribution role, taking cargo as close as possible to its inland origin/destination, including the further development of the port as a railhead and sub-regional distribution centre.
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Conclusion The Port of Workington’s financial position has been stabilised and investment has been made in the infrastructure at the port through the West Lakes Renaissance URC, as the port is regarded as being a priority for the sub-region. Given a sustainable financial future, the port should be able to perform a role in developing sustainable distribution with its local industrial hinterland and its good road link and its rail freight facilities.. Land availability is unlikely to be a constraint on the development of the port. Given current market and policy trends, its future role is likely to be as a sustainable distribution hub (waterborne, rail and road freight transport), principally serving a sub-regional hinterland. 5.3
Economic significance of North West ports
In this final section we consider the economic contribution of the ports sector in the North West and the wider UK economy. In doing so we consider the economic contribution arising from the operation of the ports themselves and from their impacts upon the competitiveness of the wider economy in the region. The analysis has been restricted to secondary sources and has not included any primary research. Unfortunately there is limited data available to assess many of the economic and business benefits which ports generate at a regional and local level, although there are a number of useful existing studies upon which we draw below. In this section we provide: • • • • •
An overview of the evidence on the scale and significance of the economic contribution of the port sector nationally A summary of the evidence on the economic contribution of the ports sector in the North West An assessment of the scale and significance of the office-based sector in Merseyside and its relationship with wider port growth Estimates of the current direct and indirect contribution of the North West ports, in terms of employment, employment income and Gross Value Added GVA) Estimates of the future direct and indirect contributions of the North West ports in light of the projected growth in port traffic over the medium and longer terms.
How do ports generate economic impact? Ports generate economic impact in a number of different ways, some of which are most significant at a local scale and others which are most significant at the regional and national scales (being concerned with the competitiveness of the wider economy). These include: •
Direct, indirect and induced economic impacts associated with port operations: The movement and handling of goods through the region’s ports
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•
•
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generates employment and expenditure in local and regional economies, which in turn supports further economic activity. Catalytic benefits: the presence of a port (providing good access to raw materials and markets) can help to attract a wide range of other industries and activities into the port and the surrounding area. This includes a range of value-adding logistics operations, manufacturing and processing. Regeneration Benefits: At a local and sub-regional level the presence and growth of ports can help to generate a range of economic and social regeneration benefits, including investment in physical infrastructure, increased local employment and skills development. Competitiveness benefits: access to an efficient port able to provide a range of value-adding benefits and ready access to markets and raw materials provides important competitiveness benefits to regional firms and sectors.
Existing Evidence on the Economic Contribution of Ports The economic impacts of ports – particularly at local and regional levels – is relatively poorly understood, in part because the ports sector can be difficult to define at the right level (obtaining information from official statistics can be problematic) and also because until relatively recently there has been limited study of their economic impacts. However, there is a growing body of national and international research on which we can draw, as well as increasing evidence of the local and regional economic impact of specific ports. It must be noted that, depending on methodology, previous studies of the economic impact of ports (or the maritime industries) have found or applied a wide range of economic multipliers when calculated the indirect and induced economic impact generated by port and maritime activity. National Evidence A study2 published in March 2009 and commissioned by the UK Major Ports Group (UKMPG) and the British Ports Association provides a useful addition to the evidence of the economic contribution of ports. It estimates that: •
•
2
In 2007 the ports sector directly employed 132,000 people (representing 0.5% of all UK employment), and that 49% of these (65,000) jobs were in transport or transport-related activities, with a further 11,000 employed in cargo handling and storage. The ports sector directly contributed £7.7bn to UK Gross Domestic Product (GDP), representing 0.5% of the total output of the UK economy. By way of comparison this is reported to be marginally more than the hotels sector and the manufacture of aircraft and spacecraft contribute.
The economic contribution of ports in the UK, Oxford Economics, March 2009.
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• •
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Taking into account indirect and induced effects the ports sector supports some 363,000 jobs in the UK (1.3% of total employment). Of these jobs, 132,000 are within or around port estates, 150,000 are employed in the ports’ supply chain and 80,000 jobs are supported by the spending of employment income of ports and supply chain staff. On this basis, it is estimated that for every job generated in a port another 1.74 jobs will be generated elsewhere in the economy... ... and ports therefore support GDP of £17.9bn, of which £7.7bn is generated within the ports themselves, £6.7bn is in the ports’ supply and the balance is supported by spending of employment income.
Beyond these direct, indirect and induced impacts, the report notes that ports allow a wide range of other industries in the UK to function, providing access to raw materials and markets. These include the UK fishing, mining and marine dredging industries as well as a wide range of firms and sectors a cross the economy who import and export materials and finished goods through the UK’s ports. Over 95% of UK imports and exports by volume (and 75% by value) goes through the UK’s ports and in 2007 UK ports handled 580m tonnes of freight. The Economic Contribution of the Ports of the Northern Way Area The Northern Way Ports Study (2005) considered the economic impact of the ports of the Northern Way area (North East, Yorkshire & Humber and North West), as well as their potential to handle increased traffic volumes resulting from a diversion of traffic and growth in traffic from the congested ports of the South East. This study concluded that approximately 45,000 people were employed across five port and port-related sectors3 in 2003, of which 17,700 (38%) were in the North West. Around 45,000 people were employed in the five sectors across the Northern Way regions – comprising the North East, North West and Yorkshire and the Humber – in 2003, representing an increase of over 11,000 people or 14.5% since 2001. These sectors generated turnover of some £3,799m in the Northern Way area, of which £1,619m was generated in the ports of the North West (see Table 5.1).
3 Building and repairing of ships and boats; sea and coastal water transport; inland water transport cargo handling, storage and warehousing.
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Table 5.1: Total Turnover in Port-Related Sectors, 2003 (£m) Building and Sea and Inland water Cargo Total repairing of coastal transport handling ships/boats water and storage transport 199 21 2 257 481 238 145 13 1,222 1,619 61 135 2 1,501 1,699
North East North West Yorkshire and The Humber Northern Way Regions % of UK
499
303
16
2,980
3,799
18.7
7.4
15.9
24.7
20.1
Source: Annual Business Inquiry. Crown copyright material is reproduced with the permission of the Controller of HMSO Note: turnover excludes VAT
The three regions of the north of England generated between them 22.8% of the UK’s portrelated GVA – based on the four core maritime sectors listed in Table 5.2 below. The majority (76.5% in the Northern Way regions as a whole) of gross value added by the four sectors is done so by cargo handling and storage activities. Although, in a key limitation of ABI data, these figures will by nature include activity in non-maritime sectors, their contribution is such that a fairly clear indication is provided that a significant quantity of portrelated activity at the Northern Way ports can be attributed to the cargo handling, storage and distribution industries. In the North West these port-related sectors generated GVA of £704.58m in 2003. Table 5.2: Gross value added in port-related sectors, 2003 (£m) Building and Sea and Inland water Cargo Total repairing of coastal water transport handling and ships/boats transport storage North East North West Yorkshire Humber Northern Regions % of UK
Data suppressed
& Way
175.36 704.58 660.45
230.96
123,318
8.24
1,177.88
1,540.39
20.9
9.8
16.4
27.2
22.9
Source: Annual Business Inquiry. Crown copyright material is reproduced with the permission of the Controller of HMSO
Evidence on the economic contribution of North West Ports In addition to the Northern Way Ports Study, there are a number of other studies which have considered the economic impact of the North West Ports (as a whole and for individual ports).
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Although now somewhat dated, the mapping study4 commissioned by NWDA in 2003 provides a useful assessment of the scale, composition and distribution of the North West maritime sector defined as: • Port company/operations; • Short and deep sea shipping; • Logistics, distribution and haulage; • Marine and offshore engineering; cruising and passenger ferries; • Fishing; and education and training. The study identified for the cluster, for 2003, the following: • • •
753 companies; Total turnover of £3.3bn Approximately 18,000 jobs (0.5% of NW total).
Figure 5.1 overleaf shows the sectoral profile of these companies and their geographical distribution across the North West. It also shows the geographical distribution of turnover and the sectoral profile of employment across the North West.
4
Source: Maritime NW Cluster Study, CI Research, 2003.
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In 2007 Mersey Maritime published a study5 of the economic impact of the maritime sector6 on Merseyside. This study was based on the results of a survey of 500 member firms of Mersey Maritime, detailed interviews with 60 firms, development of a database of maritime firms on Merseyside and searches of published company accounts. The key findings from this study were: •
•
•
The maritime sector is estimated to have contributed £710m in direct GVA in 2004/05, with a further £203m in indirect and induced GVA to the local economy. This suggests that the maritime sector contributes 5-5.5% to Merseyside’s total GVA, comparable with the contribution of the construction sector. The maritime sector offers relatively high value added employment – average GVA per employee for the maritime sector was estimated at £34,600 compared to a Merseyside all-sector average of £26,000. Direct employment in the maritime sector in Merseyside in 2004/05 was estimated to be 20,500 Full-Time Equivalent (FTE) jobs, with a further 5,900 supported through indirect and induced effects.
Current estimates of the direct economic contribution of NW Ports The Annual Business Inquiry (ABI) is the most widely used source for data on local and regional employment by sector. Using the Standard Industrial Classification (2003) system we can obtain estimates of total employment in the port-related sectors in the North West. For this exercise we have used a relatively narrow definition of port employment, using the following sectors: • • • •
Building and repairing of ships and boats Sea and Coastal Water Transport Inland Water Transport Cargo handling and storage.
Data from the ABI suggests that there are 20,000 FTE employee jobs (i.e. excluding self-employment) in the North West in these port-related sectors.
5
The Maritime Sector on Merseyside – Economic Impact Study, Fisher Associates, January 2007. 6 Defined as the following broad sectors (containing maritime specific activities): Building, repair and maintenance of ships; Cargo Handling; Engineering and Fabrication Services; Other Specialist Sectors (e.g. Underwater services, marine chandlers); Port Operations; Professional Services; Storage & Warehousing; Transport by Land and Air; Transport by Sea; Wholesale Distribution. Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Office Based Maritime Activity in Liverpool
Many of the firms within the port and maritime sector in Merseyside will have office accommodation that it supports or is Figure 5.2: Shipping, shipping agency and freight ancillary to their core activities. This forwarders on Merseyside employment is likely to be relatively closely tied to the growth in traffic volumes at the Port of Liverpool (although any relationship will not be simple or linear). Here we are primarily interested in employment in those sectors that are fully office based. These sectors are more likely to locate in a range of locations (rather than to cluster around the Port of Liverpool) and where they do cluster it is likely to be within Liverpool city centre. A number of these sectors and specific activities have the potential to add significantly to demand for Grade A office space in the city centre and elsewhere. Source: ThompsonPro
Mersey Maritime’s economic impact study suggests that over 200 Shipping, freight and forwarding agents employ approximately 5,000 people in Merseyside, much of which may be expected to be located within an office environment. A further 350 are estimated to be employed in maritime-based professional services activities. Our own search of the Thompson online business directory found circa 100 firms engaged in the following activities: • • •
Shipping Shipping agency and overseas removals Freight forwarders.
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These are mapped in Figure 5.2. Liverpool is thought to have one of the strongest office-based maritime sectors in the UK outside London. This is likely to be the result of: •
•
•
•
Historic strengths in certain professional and business services markets which cater directly to the needs of maritime clients: whilst these strengths were developed in order to serve the needs of local customers trading through the Port of Liverpool they are now likely to stand on their own and trade in regional, national and international markets. These will include activities such as maritime law, maritime insurance and marine consultancy. The availability of managerial, professional and technical staff experienced in and attuned to maritime sector employment, such as that within shipping agencies, freight forwarders and so on. Much of this activity does not require physical proximity to the Port of Liverpool or other ports in the region. The availability of related and supporting sectors: The availability of high quality professional services is likely to be an important consideration for many firms (for example, shipping line considering a new UK or European location may give weight to the local presence of maritime and trade law services. A degree of direct spin-off from the Port of Liverpool: Clearly, some of the firms and employment in office-based sectors in Liverpool are connected to or have a preference for proximity to activity at the Port of Liverpool.
As such, although there is likely to be some connection between employment in these office based sectors and growth in port traffic at Liverpool and elsewhere in the region, we would not expect the relationship to be particularly strong or simple. However, observers of Liverpool’s office market have observed that maritime activities can account for a relatively high proportion of total take-up. From time to time, strong growth in the logistics sector (as envisaged in the Superport and Ocean Gateway initiatives) may trigger catalytic impacts in which firms engaged in the control and management of national and international logistics may turn to Liverpool as a candidate location for HQ functions. There may also be opportunities for individual or groups of future office developments to employ maritime or international trade-based branding (e.g. the relatively common World Trade Centre developments that can be found throughout the world, or the World Port Centre in Rotterdam.
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Rather, we would expect future growth in these office based sectors to be based on Liverpool’s ability to demonstrate a strong offer to existing and incoming firms based on: •
•
•
•
•
The ability to offer a cost discount compared to other UK locations, particularly London and the South East. This is reported to have been a key consideration for Maersk in their decision to relocate the headquarters of Maersk Line UK & Ireland from London to Liverpool. The availability of a sufficiently large pool of suitably skilled labour with appropriate experience and which is attuned to the needs of the maritime sector The extent to which firms are able to access good quality supporting and related services (which will both help to pull in new customers such as shipping lines and allow those supporting sectors to expand their teams). Continued success in building Liverpool’s maritime economy brand: Liverpool’s history and heritage in maritime industries, together with the strength and confidence of the maritime sector in Merseyside (as evidenced by initiatives such as Ocean Gateway and Liverpool Superport) will help to attract office-based maritime activity. Providing a positive experience for maritime firms: where major firms such as Atlantic Container Line and now Maersk have positive experiences of Liverpool and the North West as HQ locations there is the opportunity to pull in further functions from other parts of these major international groups. There may also be some clustering (or perhaps herding) behaviour, whereby other firms follow major firms like Maersk (a phenomenon that can be observed in many other sectors).
The availability of a lower cost property (and labour) should form the central part of Liverpool’s inward investment proposition in this market. 5.5
Future Economic Contributions
As noted above, identifying the economic impact of the maritime sector is relatively difficult. Projecting future increases is more challenging still. However, it is possible to generate robust estimates of the current and projected future economic contribution of activities within the port estates of the North West for LoLo (container) and RoRo traffic (direct and indirect impacts). We estimate that the total direct economic contribution of these traffics within the North West’s port estates in 2007 was as follows: • Gross Value Added (GVA) of £27m • 470 jobs Projected growth to 2030 in these traffics suggests that this contribution will grow to: Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Gross Value Added (GVA) of £43m 850 jobs.
These estimates are shown in Figure 5.3 below. Figure 5.3: Direct Economic Contribution from activity in North West Port Estates – LoLo and RoRo only
Source: Regeneris Consulting calculations It is highly likely that labour productivity improvements in the port sector would reduce the level of employment required to handle increased cargo to 2030 from those shown here. Ports have strong linkages to economic activity beyond the port estate, providing inputs and services to a wide range of industries. As such, the indirect multiplier effect of this activity is likely to be relatively high. Drawing on evidence from other studies we have applied a range of indirect multipliers, from 1.8 to 2.7. An indirect multiplier of 2.7 suggests that this activity within the North West’s port estates associated with these LoLo and RoRo traffic supported in 2007: • Gross Value Added GVA of £73m • 1,300 jobs. By 2030, this would rise to: • Gross Value Added (GVA) of £132m • 2,300 jobs. Printed on 16/07/09 11:16 Our Ref: 208117R Final_report rev 8
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Figure 5.4:Direct & Indirect Economic Contribution from activity in North West Port Estates â&#x20AC;&#x201C; LoLo and RoRo only
Source: Regeneris Consulting calculations
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Key Messages
The role of ports in the North West region as economic drivers has changed over the past 2-3 decades. Whilst ports continue to be a hub of port related activities and services, they have become less important locations for the clustering of manufacturing activity, although there continue to be inward investment projects in some sectors and locations. In the past, towns and cities in the North West with ports grew on the back of the attraction of industries which imported raw materials through the port, who undertook their value added activity close to the port. Liverpool is a good example of this, with for example the food processing industry growing strongly both in close proximity to the port estate and on industrial estates elsewhere across the city. Other sectors in the North West grew in part due to the availability of good port access including the chemicals sector, paper manufacture, and iron and steel production. In all these cases, close proximity to a port was desirable due to the significant costs of transporting bulky input or outputs to and from the manufacturing facility. Today, the tendency for manufacturers to locate in the immediate proximity to the port is far less apparent than in the past. The reasons for this vary from sector to sector but include: •
• •
The decline within the region of those manufacturing sectors for which close proximity to the port and hence good access were important (such as food manufacturing). Linked to this, there has been strong growth within the region’s of knowledge based sectors for which proximity to a port is not a consideration (although good port access may still be a consideration for some of these); The growth in containerisation and RoRo services, with higher volumes of cargo passing straight through the port to their destinations in the hinterland; The introduction of IT technologies and related changes in the manufacturing and distribution practices of sectors. Many manufacturers have located their manufacturing activities closer to markets (rather than to sources of inputs).
The growth of new distribution practices has, however, led to the development of significant centres of logistics activities with port operators seeking to benefit from this growth. The expanding LIFT zone in Liverpool is a good example of the development of port-centric distribution, as is the growth of major import centres operated by or on behalf of major UK retailers.
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NWDA: North West Ports Economic Trends & Land Use Study
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GLOSSARY OF TERMS CAGR Coastal shipping
Container
Conventional cargo Deadweight (dwt) Deep sea shipping Draft Freeport zone LIFT Linkspan LoLo Megafret wagons
Municipal port Private port RoRo Semi-bulk cargo
Short sea shipping
TEU
Trailers (accompanied and unaccompanied) Trust port 3PL
Compound Annual Growth Rate The movement of cargo by sea between two ports of the same country; this means that traffic between the North West and Northern Ireland (part of the UK, but not included within GB) is treated as coastal shipping. Standard units made of steel, usually with end doors. Standard sizes are used so that they are easily stackable on land and easily stowed on a vessel; can also be carried on trucks and on intermodal railway wagons. Remainder of cargo not covered by unitised, dry, liquid and semi-bulk; usually the most intensive in terms of labour requirements. The standard measure of capacity for a dry bulk vessel, which is an approximate measure of the maximum cargo weight that can be carried. The movement of cargo by sea between UK ports and ports situated outside Europe and the Mediterranean. The standard measure of a vesselâ&#x20AC;&#x2122;s depth below the water line, usually stated in metres. A zone where goods can be stored without incurring duty. Liverpool Intermodal Freeport Terminal A bridge between a hard quay and a RoRo ferry, to allow the loading and unloading of wheeled traffic. Container ship services Intermodal rail wagons that are lower than the standard wagons used by the main intermodal rail freight operator, Freightliner, and allow large maritime containers to be carried within a more restricted rail loading gauge. A port that is owned by a local authority. A port that is owned by a private company. Commercial vehicles and assembled cars on wheels shipped as roll-on roll-off freight on ferries. Cargo that presents itself at a port in such a way and in sufficient quantity to significantly reduce handling costs, but which is not fully unitised; examples include rolled newsprint, packaged timber and steel coil. The movement of cargo and passengers by sea between ports situated in geographical Europe or between those ports and ports situated in non-European countries with a coastline on the enclosed seas bordering Europe. Twenty feet equivalent unit; standard measure of the volume of containers handled at a port and by a shipping line; a forty feet long container is therefore two TEU. Standard road trailers; accompanied trailers are where there is a tractor unit and driver with the trailer on the sea crossing; unaccompanied trailers are where the trailer is not accompanied by tractor unit and driver on the sea crossing. A port which is owned and operated by a trust; the board of the trust has a duty to manage the port in the interests of its stakeholders. Third party logistics operators: companies that carry out transport and warehousing operations on an integrated basis for their customers.
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