London Gateway port to finally open

The news has seeped-out that the large new container port on the Thames Estuary, known as the London Gateway, will receive its first ship this Wednesday, November 6th.

Reports state that the MOL Caledon, a 5,000 TEU vessel on the north-south trade between Europe and South Africa, will arrive late in the evening. It has also been reported that it has shifted its arrival from the port of Tilbury, a short distance up-stream from the new terminal. Whilst the MOL Caledon is just one medium-sized vessel it might be suggested it illustrates that rather than competing directly with the largest British container port at Felixstowe, London Gateway will in great part suck business away from the smaller ports in the region. However, if the port is to achieve its long term vision of 3m TEUs a year it will have to develop its position at the centre of British exporters’ and importers’ supply chains. The realisation of this is the motivation behind the creation of the logistics park which is integral to the site.

When London Gateway was conceived, the macro-economic environment was quite different with world trade growing rapidly and Britain appearing to face a shortage of container port capacity. Today, world trade growth has slowed to little more than 2%, whilst rival ports have taken steps to defend their market-share.

Felixstowe is engaged in a project to both ease the handling of very large vessels and expand its container handling capacity, both on the sea and land –side, the latter being through investments in a new rail terminal and higher intensity of service. The potential also remains that Southampton will expand its capabilities whilst the ability of both the Maasvlakte2 development at Rotterdam and the existing Antwerp facilities to compete for UK traffic should also not be dismissed.

DP World, who owns the London Gateway development, has been ambitious and aggressive in their management of the site. Yet their third quarter results showed that underlying container volumes grew by 2.4%, with much of the growth coming from the United Arabia Emirates and Asia Pacific terminals. The implication is that European traffic was either static or fell. This will make the success of London Gateway all the more difficult in the short-term, despite the recent growth of the British economy.