Felixstowe in War of Words With London Gateway

Felixstowe in War of Words With London Gateway

Felixstowe, the U.K.’s biggest container port, has stepped up hostilities in a war of words with the new London Gateway terminal that will open for business in a depressed market before the end of the year.

London Gateway, owned by the Dubai, United Arab Emirates-based DP World, has made most of the running, claiming its location 30 miles from the U.K. capital and its densely populated surrounding regions gives it a major advantage over its rivals.

The announcement in June that Marks & Spencer, the U.K.’s biggest food and clothing retailer, will invest more than $300 million in a 900,000-square-foot distribution center at London Gateway was a major coup for DP World and an endorsement of its claim that its new facility will allow companies to completely re-evaluate their supply chains.

But Felixstowe hit back this week with a study it commissioned from MDS Transmodal claiming inland transport costs for a single import container via Felixstowe  is £25 (about US$38.91) cheaper than via London Gateway.

“The inland distribution of import cargoes is based upon the location of large warehouses and not population,” according to the study. Most big warehouses of more than 9,000 square meters are located in the middle or north of England, while London and southeast England have only 11 percent of large warehouses, despite having 30 percent of the population.

London Gateway also faces extra costs due to road congestion around London, while Felixstowe benefits from its rail links which account for around a third of inland container traffic.

Based on a study of 1,000 truck trips, MDS Transmodal calculated one-way inland transport cost per container at £301 for Felixstowe, £309 for London Gateway and £312 for Southampton, the second largest container port. It added an extra £17 for the diversion costs to London Gateway from the main Benelux (Belgium, the Netherlands and Luxembourg) container shipping routes making Felixstowe £25 cheaper than its new rival.

MDS Transmodal explained that the cost of a ship sailing an extra 76 miles to London Gateway compared with Felixstowe was based on a 10,000 20-foot equivalent unit vessel unloading 2,200 containers at a U.K. port. “Without exception, deep-sea ships serving the U.K. also call at a Benelux port,” MDS Transmodal said.

London Gateway, which has an initial annual capacity of 1.6 million TEUs and is scheduled to open in November, has so far attracted only one customer – the four carrier SEACS consortium, which is switching its Europe-to-South Africa service from London’s Tilbury container terminal.

Felixstowe, which is 55 miles to the east of London Gateway, handled almost 3.7 million TEUs in 2012, or 42 percent of total U.K. traffic, and is adding an extra 1 million TEUs of capacity. And despite London Gateway’s imminent opening, Port of Felixstowe’s owner, Hong Kong-based Hutchison Ports, is sticking to plans for a $500 million container terminal at Harwich, a nearby ferry port.

The battle between Felixstowe, London Gateway and Southampton, which will boost capacity by 500,000 TEUs in January 2014, is taking place against a backdrop of flat traffic growth.

Contact Bruce Barnard at brucebarnard47@hotmail.com.