About a million TEUs are already committed to using London Gateway, DP World’s deep sea container port which is due to open in the fourth quarter of this year on the banks of the river Thames. “It is all coming together very nicely,” CEO Simon Moore told Port Finance International.
During an interview in an office building close to the construction site in Stanford-le-Hope (Essex), he did not divulge which shipping line would be London Gateway’s anchor customer. “That takes two people to decide. It is not completely in our hands. When both parties are ready to make an announcement, then we’ll do that.”
He could not give either the exact opening date for the terminal, but hoped that could be announced “very soon.”
“Projects of this size and scale are like a very big jigsaw and all the pieces are coming together,” Simon Moore told PFI. Mentioning the first three giant quay cranes which the port received earlier this month, he said: “It focuses everyone’s mind that things are on timetable, on budget, and we’re on course to open in the fourth quarter of this year.”
Worth £1.5 billion of foreign direct investment, London Gateway is designed to accommodate Ultra Large Container Ships (ULCS). For the moment, those giant ships can only call at Felixstowe (Suffolk), a little bit further north on the western coast, and at Southampton (Hampshire), on the southern coast.
Operated by Hutchison Port Holdings (HPH), Felixstowe is currently Britain’s busiest container port, handling over 3.4 million TEUs a year. Over 40% of Britain’s containerised trade passes through the port.
Felixstowe and Southampton are both “well established ports with regular rail connections,” notes Neil Davidson, senior advisor – ports, at Drewry Shipping Consultants, adding that London Gateway will therefore need to “differentiate itself from the existing players.”
Location, location, location
Simon Moore is confident that London Gateway’s main asset is its location, 25 miles (40km) east of London. “We’re closer to the end user. We’re closer to the market. We’re closer to the consumer. We have 18 million people within our natural hinterland. There is no better located hub port in the UK.”
He claims that road links and rail lines make London Gateway also closer to the Midlands distribution centres. He estimates that carriers can save about 70 pounds on fuel for every container. As for rail, he notes that the port is close to the West Coast Main Line, which goes up to Birmingham, Manchester and Liverpool. DB Schenker will be providing rail services from day one at London Gateway.
However, “it is quite a complex calculation to work out the ultimate location,” underlines Neil Davidson. “The benefits will vary from shipper to shipper, depending on what cargoes they bring into the country, how they organise their distribution, whether all their cargo comes in by sea from Asia or whether they have also cargo coming by truck from somewhere else.”
And equipment
The approach to London Gateway is longer than to Felixstowe as ships will need to sail down the river Thames. But Dubai-based DP World hopes to outweigh that by turning ships around faster thanks to its equipment.
Xavier Woodward, communications manager, gave PFI a guided tour of the construction site. On the quay, the cranes are so high that they can unload the largest ships even when the tide is up, he explained. And in the yard, the Automated Stacking Cranes (ASCs) can move containers 24/7 – and windy conditions will force their closure less than if they were manned.
“We have a lot of focus on technology and our capability to handle the biggest ships in the world. That is why we have the biggest cranes in the world here,” says Simon Moore. “The container yard is fully automated, so that will allow us to operate the container yard when the weather is a little bit tough. And it should allow us to stay open that little bit longer, which again is going to be beneficial for cargo owners who will still be able to operate and to trade, potentially when other locations aren’t able to do so.”
What’s next
London Gateway plans to open its first berth in Q4, its second berth in the second quarter of next year, and its third berth six months after that. After that first phase, it will assess market demand before opening berths 4, 5 and 6. On completion, it will be equipped with 24 quay cranes and about 120 ASCs. And it will have a capacity of 3.5 million TEUs.
“It will be one of the major UK container ports along with Felixstowe and Southampton. No question about that,” says Neil Davidson, of Drewry. “Shipping lines are conservative, for sure, but they are also driven by service and price factors.” In his eyes, the first big test of London Gateway’s success will be: “Who is going to be the first shipping line customer?” This is primordial in a lumpy market where 70% of the deep sea business is split between only four main players now: Maersk Line; MSC and CMA CGM (two lines); G6 Alliance (six lines); CKYH (four lines).
“London Gateway will offer shipping lines and beneficial cargo owners new port choices and logistics options,” notes Jamie Simpson, executive director of consultancy firm ICF GHK. “However, the demand and supply balances have shifted since the London Gateway was conceived, including softer demand conditions and more financially constrained customers. This will likely place pricing pressures on all terminals to build and retain volume - this is good for shipping lines, perhaps less so for the port operators.”
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