The Publication For The Grocery Trade

PD Ports - The Interview Teesport - ASDA's Portcentric Logistics Solution

As UK markets become increasingly dependent on imports - in retailing, wholesaling and manufacturing - the business case is totally compelling for establishing Combined Import Processing and Distribution centres (CIPDC's) close to the port of entry. Adding to the pressure, there are currently no firm plans to significantly upgrade the infrastructure in the South. On top of this the constantly growing strain on Southern ports is leading to congestion, with no short-term fix likely. The region's roads and motorways are increasingly congested making inland DC's very unattractive. PD Ports offers an answer to these problems at Teesport, its deep-water port on Teesside in Northeast England. The solution is based on the idea of Portcentric Logistics. This is the practice of de-stuffing containers close to the point of import and holding the goods in bond until required, then taking them direct to the end customer. Over the next five years PD Ports will spend around £300m on infrastructure, services and equipment within Teesport, to support its push to make UK PLC embrace Portcentric Logistics. This model for future supply chains will position Teesport as the Northern gateway for containerised cargo traffic. In its first year of being actively marketed, Teesport's Portcentric Logistics proposition has been embraced by leading UK retailers ASDA and Baird Menswear. Both have set up major import processing and distribution centres in the port's Bonded Area, with more retailers set to sign shortly. The UK arm of Wal-Mart, ASDA has built its own 500,000 square foot warehouse on the site, and is directing its UK-bound containers of non-food products from the Far East to Teesport. With significant numbers of other high street retailers in a number of sectors and manufacturers expected to confirm their options on plots within the next six months, the interest level in Teesport is rising exponentially. Teesport's Portcentric Logistics proposition is in stark contrast to the UK's prevailing logistics model of hauling containers to central DC's and back-hauling empty containers to ports. As UK businesses seek to become greener, Portcentric Logistics is the only environmentally friendly solution, which minimises CO2, CO and NOX emissions. The goods miles are therefore reduced drastically. PD Ports' Portcentric Logistics concept is born out of its management's substantial experience. PD Ports is an established ports and logistics business offering port services on Teesport and Humberside, and logistics, warehousing and transport services throughout the UK. PD Ports as it is now was established in 2002 out of several other British port authorities. It employs 1,200 people and has £130m annual turnover. The Teesport development takes PD Ports' integrated service proposition a significant stage further. Graham Wall, PD Ports' Commercial Director, leads the Portcentric Logistics development team at Teesport, with Martyn Pellow, Group Development Director and Michael McConnell, Property Director. "PD Ports decided to develop the Portcentric Logistics concept at Teesport," Graham explains, "because it's one of the few UK ports with a land bank inside the boundary, and we felt there was a strong commercial case for locating distribution centres there. We began developing the general warehousing concept at the docks back in the 90's. It took off more slowly than expected, but in the last two years as environmental impacts have become a prime concern the Portcentric logistics proposition makes increasing sense." Portcentric Logistics is high on PD Ports' overall agenda: "With the growth in container freight, this is key to our total business. Historically Teesport relied heavily on steel and dry bulks. There's a question mark over future manufacturing here, but in long term planning we see Portcentric Logistics as an accelerator to growing UK FMCG markets." The Portcentric Logistics concept requires ports with deep water capacity and port side land mass. Teesport has 15 metres depth in the main channel and excellent support infrastructure, a hangover from Teesside's chemical and steel production heyday. PD Ports has plans for similar developments at Immingham, Hull. It is also active in acquiring suitable European ports where Portcentric Logistics is feasible, and will make some announcements over the next year regarding locations in Europe, mainly Benelux. Turning the vision into reality The 'Portcentric Logistics' development at Teesport goes hand in glove with PD Ports' major developments of the dock area at Teesport, which will enable the port to take vessels of up to 9,000 TEU (20 foot equivalent units.) PD Ports is constructing a 1 km quayside at Teesport, set to be operational by mid 2008. Some 360,000 TEU of container freight per year currently comes into Teesside, representing 3.5% of UK trade. This figure is set to hit 1.5m TEU by 2015 as the port develops. Alongside the harbour PD Ports is developing at Teesport are 2,000 acres of brownfield land, with full planning permission. On the North side are petrochemical facilities involving Conoco Philips and others. PD Ports' land on the South side is available now for development as warehouses, enabling imported goods to be held securely in bond within the vicinity of the port until stocks are called off and moved by local pallet or parcel carriers, or rail. As the entire development site at Teesport is within a Bonded Area, import duty and VAT payable on goods are deferred while stocks are held there, reducing costs and tied-up capital for importers by up to 22%. Simplifying matters, the Bonded Area means a single point of contact for imported goods and single-point handling for Revenue and Customs. Another benefit of the bonded area is that trucks can operate on 'Red Diesel' on the private roads within the Area boundary. PD Ports' Portcentric Logistics proposition is great news for the UK. As businesses face mounting pressure to reduce their environmental impact, with carbon footprints, product miles travelled, back hauling and other environmental indicators coming increasingly under the spotlight, ultimately Teesport is designed to offer a carbon neutral footprint. The reduction in driver hours from working this way also helps companies meet their Working Time Directive obligations. Teesport offers the ability to handle the most economic ships feeding the port, with minimum distances from ship to distribution centre and on to end user. A distribution facility at Teesport will mean a more acceptable carbon footprint, with increasing use of renewable energy sources for product movement and the minimum practical handling of all the goods processed. Embracing the vision PD Ports owns the land at Teesport. It offers 50-year leases, with no limit on maximum size for proposed schemes. Options are totally flexible, from pure rental to land-only leases, "we build, you rent" schemes and fully managed design and build projects. With each option the customer enjoys the full security services of the port facility, access to all the local services and amenities, and an interest in the future development of the port. PD Ports can also put together packages for occupants to supply all the elements of a first class 21st century warehouse, including flooring and racking, WMS, voice-picking and supply and maintenance of fork lift trucks to meet clients' requirements. Completing the Portcentric Logistics proposition at Teesport, various container hauliers are on hand to move goods forward. A long established business on the site, Bulmers offers nationwide transport and warehousing services. Stillers moved in recently and are said to be "delighted" with their volume of business. Hanbury Davies followed during April. Starting with five vehicles they now have 14, and have not had one vehicle standing. Graham Walls' hit list of potential occupants for the Bonded Area covers everyone from grocery retailers and non-foods retailers to traders in industrial products and components. Helping would-be occupants come to Teesport, from initial conversation through to opening day is Peter Jeffery, co-ordinator of development. He has been involved with PD Ports' Teesside project since August 2006, and can offer a wealth of expert knowledge about the complexities of locating and setting up warehouses. Peter helped develop an innovative warehouse at Peterborough for a major retailer, and was previously with PE Consulting. As a consultant in his own right he has also carried out major strategic work for Colgate Palmolive, B&Q and Group Schneider. Peter says PD Ports' Teesside facility will go a long way to relieving the current discomfort in England's Southern ports. These are full, with Southampton, Felixstowe and London "famously overcrowded." There is "no significant spare land left at Felixstowe," says Peter. In addition, Felixstowe closes completely when the wind blows strongly. When the wind blows on Teeside - "which has only happened three times in five years" - the port side closes, but the land side continues to operate. Teesport offers fast services to England, Scotland and Ireland, and from Europe, with direct container links to the Far East and Mediterranean. Complementing the facilities at Teesport, there is a fast communications infrastructure in the Northeast, with good quality connections going South, West and North from Teesside. There are similar quality passenger rail links from Teesside and established freight train services to Trafford Park, Wakefield, Doncaster and Moss End. There is also easy access to Durham Tees Valley and Newcastle Airports. As well as direct links to China, Korea and Japan, Teesport can offer Ro-Ro services to and from Rotterdam and Zeebrugge, and feeder services to and from other North European cities. Teesport has an expanding portfolio of services to and from the Mediterranean and Africa, and auxiliary services to and from Felixstowe, Thamesport and Southampton. A welcome development PD Ports have full planning permission from the local authorities to develop the Bonded Area at Teesport. When they wanted to modify the port facilities, by law they needed a Harbour Revision Order because they were changing the port materially. This is still with the Department for Transport, and has involved a public consultation process. Peter Jeffery says: "We've received total support locally, with no objections of any sort. We contacted thirty local interest groups, including the local bird watching society, and everyone is behind us." Teesport is set to generate some 7,000 jobs over the next few years. The workforce on Teesside is numerous, with good availability of skills. The "Olympics effect" is set to create a major labour shortage in South East England in the run up to 2012, but Teesport's direct labour requirement of 5,000 to build the projected number of facilities as the Bonded Area grows will not be affected. PD Ports' Teesport facility is currently 40% occupied. Peter Jeffery says another ten per cent of the site has high interest from potential clients, including another major UK grocery retailer. Peter maintains there are two kinds of people in UK logistics - those who will embrace the portcentric logistics idea and those with a heavy investment in, and therefore commitment to, inland distribution centres, who will hold back. However as high profile occupants continue to come to Teesport, the pressure on others to move there will increase. Driving demand for sites at Teesport, PD Ports has a 7,000 strong database of contacts, each allocated to an account manager. The development team is energetically promoting Teesport with a major stand at the CILT Show in Birmingham and activity in retail magazines including The Grocer weekly and multiple retailers' title The Grocery Trader. "While the amount of land available for development is very significant, it is not infinite," Peter warns. "To borrow a retail expression, 'When It's Gone, It's Gone.' " Teesport is equipped to grow dynamically and exponentially to occupy the land available within the Bonded Area boundary, which will expand as more companies come in. The message is clear, says Peter Jeffery. The future increasingly lies with imports, and their supply chains are substantially dependent on good port facilities. To safeguard their future trading position, they have to consider the commercial advantages of Portcentric Logistics. "It is not a case of 'Watch this space' as Teesport develops. Companies need to act now, or it will be more like 'Watch the available space disappear before your eyes.'" PD Ports Tel: 01642 877000 www.pdports.co.uk