Tilbury confident as London box ports battle for market share

Thank you Boris and Cameron for putting 4 ports at risk for one port. As it staes in this article there is no new work for this new port.

LONDON is at the centre of a ferocious battle between the ports that serve southeast England and beyond, with some experts questioning whether all can survive.

Behind the upheavals are three major developments that are shaping the future of the UK ports industry.

DP World’s London Gateway, which has already announced its first liner shipping customer, will formally open in the fourth quarter of 2013 with the arrival of MOL Caledon.

The formation of the P3 fleet alliance between Maersk Line, Mediterranean Shipping Co and CMA CGM has left ports around the world in limbo while they wait to hear service schedules — no more so than in the UK, where Felixstowe, Southampton and London Gatewaywill all be vying for their custom.

The arrival of a major new container terminal close to London, coupled with the groundbreaking P3 partnership that will have far-reaching consequences for the whole industry, could not have come at a more difficult time for UK ports.

For all this is taking place against the backdrop of flat trade conditions, particularly in the Asia-Europe trades, where lines are now starting to introduce 16,000 teu and 18,000 teu ships at a time when volumes are not expected to return to the double-digit growth rates of a few years back.

This has left Felixstowe, Southampton and now London Gateway pursuing the same business, given the lack of organic growth.

But in the London region, two other smaller ports are also caught up in the fight for cargo: Hutchison’s Thamesport and Tilbury, which owns London Container Port.

Thamesport has already lost some deepsea customers, with Evergreen moving to sister port Felixstowe, and a joint Hapag-Lloyd/OOCL transatlantic service switching to Southampton.

That leaves just shortsea operators BG Freight Line and MacAndrews, a subsidiary of CMA CGM, which recently moved most of its services from Tilbury to Thamesport and speaks enthusiastically about the fast turnround times it is receiving.

Tilbury is also about to lose the Southern Africa Europe Container Service to London Gateway which, despite the fanfare about aiming for Asia-Europe operators, has had to settle for a Europe-southern Africa service for its inaugural customer.

Behind that consortium, though, are Maersk Line and Mitsui OSK Lines, both of which are thought to have their own strategic reasons for gaining a foothold in London Gateway.

Maersk may well be intent on sending a signal to Felixstowe, while MOL wants to send a similar message to Southampton, say industry insiders.

But Tilbury, the oldest by far of the London trio, is confident it has the cargo mix and business strategy to withstand the intense competitive pressures that are looming, and is telling the market that it does not expect to lose any business as a result of service quality or price.

“We will not let Tilbury wither on the vine,” says Perry Glading, chief operating officer for Forth Ports, which owns Tilbury and purchased full control of Tilbury Container Services in January 2012, buying out shareholders DP World and ABP. The facility has been renamed London Container Terminal.

Forth Ports, which was acquired by Arcus Infrastructure Partners in 2011, is confident Tilbury can defend its position in the north-south and intra-Europe container trades.

The port, on the north banks of the Thames, is not competing for the services that are operated with ships of 14,000 teu or more, principally the Asia-Europe trades, but is able to handle vessels of up 10,500 teu.

Nevertheless, Mr Glading dismisses suggestions that Tilbury is not in the same market as London Gateway or Felixstowe. “That’s nonsense,” he says.

With the exception of Asia-Europe business, Tilbury is competing with both ports, he insists.

But Tilbury’s strength is its diversity, with containers only accounting for around half of the total throughput in tonnage terms. Cargoes handled include cars, waste and recycled commodities, and the spoil from the Crossrail tunnel now being excavated beneath London. Cruiseships also call at Tilbury.

But containers are an important part of the package, with volumes up 12% in 2012 to 900,000 teu for customers such as Hamburg Süd, Hapag-Lloyd. CMA CGM, Maersk Line and Samskip.

That is considerably below annual capacity of around 1.4m , while some 40,000 containers a year will be lost when SAECS moves to London Gateway later this year.

While disappointed to see such a long-established customer leave, Mr Glading does not believe the consortium is moving because of dissatisfaction with Tilbury.

Tilbury also continues to invest in upgrades to its container facilities, spending some £30m ($47m) so far this year on new straddle carriers, ship-to-shore cranes and IT.

But with the container market expected to be challenging for many more years, Tilbury also has the benefit of other types of business.

That does not apply to Thamesport, a semi-automated complex located on the Isle of Grain to the east of London, which opened in 1990 with an initial capacity of around 300,000 teu a year.

It was acquired by Hutchison in 1998, having gone into administration a few years earlier, with capacity subsequently raised to an annual 635,000 teu.

Mr Glading questions Thamesport’s prospects, given its location and 100% focus on containers, and says he would welcome back MacAndrews, should circumstances change.

Thamesport’s owner Hutchison declined to comment on speculation about the port’s future.

What all in the UK ports industry are asking is whether there is room in the market for five containerports in southeast England. If not, which one will go?

Mr Glading, who joined Forth Ports in 1999 after 22 years with Geest North Sea Line, is confident that Tilbury’s niche businesses and cargo diversity will see it through one of the toughest periods the industry has yet encountered.