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The case for portcentricity


Land economics
The world economy changes very quickly and international cargo flows are inextricably tied to these patterns of international trade.  No longer is there a firm status quo in supply chain design.  How exports of industrial parts, imports of clothing and household goods, shipment of steel components or agricultural raw materials moved in the past does not represent how they will move in the future. This alters the land economics of manufacturing location and site selection criteria and will increasingly impact when and where distribution takes place.
Oil
To transport goods and people the World consumes over 175 quadrillion Btu of crude oil (that’s more than 50% of World oil usage (source EIA)) and as the era of cheap oil has come to an end, illustrated on our chart opposite, the need for lower cost supply chain transport solutions is essential. Substituting sea and river miles for road miles lowers the carbon footprint of freight transport and contributes to Corporate Social Responsibility agenda.
Reliability
Many countries and companies are also engaged in long term programmes to reduce deficits, balance sheet debt and improve cash flow. Add to this the risks arising from the unforeseen impact of natural disasters on supply of products and components, and it becomes evident that more reliable supply chain solutions with lower carbon emissions will be essential. For some products this may mean a return to local assembly closer to the place of consumption (the term “glocalisation”) but for other products international trade across global trade routes to maintain competitiveness will be paramount. Port centric logistics investment and operations will continue to play their role to meet these challenges.

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A Sea Change

The dramatic developments of recent years have had a significant worldwide impact on cargo movements to meet customer expectations.


Investments

The momentum for change can be seen in the actual investment programmes at port locations in North West mainland Europe, on the Rhein, around the Thames Estuary, in the Haven Gateway, in North East and North West England. And these investments are not only being made by Port operators. New distribution centres, new transport infrastructure and new industry clusters accompany the growth of port centric logistics, bringing new vitality to communities that are often amongst the lowest ranking for employment prospects and socio-economic opportunity. The potential for regional ports to be part of these new logistics systems and to be hubs servicing renewable energy generation further emphasises this opportunity.

Comparative Advantage

As road and rail haulage costs escalate, it is apparent that facilities located close to a shipping port have significant competitive advantage compared to other factories/distribution centres located at great distances away from sea ports. To extract maximum value from these international supply chains, postponed manufacturing and port centric logistics are gathering significant momentum.

The benefits of portcentricity


• For port authorities and local industry, capturing economic value at or near to their port generates new income streams and extends regional economic reach.
• For property investors, this secures new customers and generates higher rental incomes and asset valuations.
• For communities, this will translate into new revenue streams and high quality jobs; connecting communities and their local businesses into new global trade patterns leading to further economic growth and a stronger competitive position.
• For inward investors engaged in international trade, a port-centric approach brings the economies and benefits of being part of an industry cluster of skills, knowledge and culture.


The evidence for portcentricity


In UK new facilities have been constructed at regional ports such as Teesport and Tyne to provide port centric distribution facilities for retailers such as Asda Walmart, Tesco and JML Direct. The ports of Liverpool and Bristol on the UK’s west coast and the world’s two largest port operators, Hutchison and DP World, have embarked upon planning and construction of substantial new capacity at their UK operations. The London gateway project (DP World) will create Europe’s largest logistics park with a deep sea container terminal on the River Thames with an investment of over US$2 billion for which the first phase opened in November 2013.

The influences of higher fuel costs, port congestion and ever-increasing awareness of carbon footprint are causing gradual, but fundamental reevaluations of previous logistics patterns.  These combined issues will create windows of opportunity for innovation, allowing communities and their ports to create value in becoming important centres for international trade with the associated economic benefits that come with that.
Those companies and regions that understand these dynamics well, and can translate those dynamics into solutions, will establish themselves as key players in tomorrow’s economy. 

PCLP and portcentricity 

Through market analysis, infrastructure appraisal and capacity potential, PCLP conducts opportunity analyses and helps clients to build sustainable business plans and project delivery solutions.

For every port region the solutions will differ. The availability of land, on or adjacent to the port estate, connectivity with other sea ports and with the hinterland and the realistic capacity available for business growth will govern your solution. Capacity at the quayside, capacity on/around the port estate and capacity on the transport network to move freight to and from the shippers’ destinations will be critical to the investment plan.


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